EV Pay-Per-Mile Tax Could Cost UK Fleets £260m Annually in Admin Fees
New analysis from the British Vehicle Rental and Leasing Association (BVRLA) has issued a stark warning about the government's proposed pay-per-mile electric vehicle duty (eVED). According to the trade body, the scheme could impose a staggering £260 million per year in compliance costs on the UK's fleet sector by 2028, purely from administrative burdens.
Breaking Down the Financial Burden
The BVRLA's figures, derived from member data, indicate that direct administration costs would account for approximately £75 million annually. However, the larger portion of the expense, estimated at £185 million, is linked to lost productivity when vehicles are taken off the road for mandatory mileage checks. This combined financial load represents roughly 10% of the total revenues the Treasury expects to generate from the tax.
Some industry insiders suggest the real cost could be even higher, with estimates ranging between 40p and 45p for every £1 collected once broader operational impacts are factored in. Notably, these projections do not include one-off implementation costs, the expense of obtaining mileage readings at approved centres, or the actual tax payments themselves.
Industry Leaders Voice Strong Concerns
BVRLA Chief Executive Toby Poston has been vocal in his criticism, describing the policy as "extremely fleet hostile" during evidence presented to the Transport Select Committee. He warned that the scheme risks being introduced "in the wrong way at the wrong time," potentially undermining efforts to accelerate the electric vehicle transition.
Poston highlighted several practical challenges facing fleet operators:
- Leased vehicles are rarely inspected in person, complicating accurate mileage collection.
- The system would require fleets to estimate, report, verify, and reconcile mileage data across large numbers of vehicles.
- Annual verification processes would lead to additional downtime, temporarily taking vehicles out of service.
Potential Impacts on EV Adoption and Costs
With BVRLA members currently operating around 1.1 million battery electric and plug-in hybrid vehicles—a figure forecast to rise to 1.5 million by 2027—the overall impact is expected to grow significantly as fleet electrification continues. The association argues that the policy, in its current form, could become an "administrative headache", adding friction and cost to a sector crucial for driving the UK's shift to electric mobility.
Evidence submitted to the committee also raised concerns that additional costs could erode the total cost of ownership benefits that have made EVs attractive to businesses and consumers. Any extra financial burden is likely to be passed on to customers, potentially dampening enthusiasm for electric vehicles.
Wider Industry Echoes the Warning
Fiona Howarth, founder and director of Octopus Electric Vehicles, echoed these apprehensions, stating: "By 2028, this is set to cost fleet operators around £250m a year—money that ultimately comes from drivers, businesses, and households who rely on these vehicles every day."
Howarth emphasised that with ongoing uncertainty over oil prices and supply, the focus should be on accelerating the transition to electric vehicles. She argued that a pay-per-mile approach risks doing the opposite by adding complexity and cost just as drivers are beginning to see EVs as the simpler, better option.
Calls for Policy Redesign
Industry feedback suggests the proposal could have a deterrent effect on EV uptake, particularly as it would apply to vehicles already on the road. BVRLA members warn it risks penalising early adopters while introducing additional complexity and uncertainty, potentially conflicting with wider government messaging aimed at boosting electric mobility.
The association is urging ministers to collaborate more closely with the industry to redesign the scheme. They argue that any future approach must be simpler, more technology-led, and better aligned with how modern fleets operate to avoid stifling progress in the UK's decarbonisation efforts.
