EV pay-per-mile tax to cost fleets £260m a year, BVRLA warns
- 26 March 2026
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The UK’s shift to electric vehicles is under threat from the proposed pay-per-mile tax that could saddle the fleet sector with £260m in annual costs by 2028, the
The UK’s shift to electric vehicles is under threat from the proposed pay-per-mile tax that could saddle the fleet sector with £260m in annual costs by 2028, the British Vehicle Rental and Leasing Association (BVRLA) has warned.
The cost, which is based on BVRLA member data, includes £75m in direct administration costs and £185m in lost productivity from vehicles taken off the road for mileage checks.
The analysis also reveals that the sheer complexity of the eVED system could see 10% of all revenue raised swallowed up by red tape and lost productivity. While HMRC typically aims for a 0.5% collection cost, some BVRLA members warn that the operational reality of this tax could cost 45p for every £1 collected. These figures exclude the actual tax bill and one-off setup costs.
And with BVRLA members expected to operate 1.5 million battery electric and plug-in hybrid vehicles by 2027 – up from the current 1.1 million – the scale of impact will grow rapidly.
Giving evidence to the Transport Committee’s ‘Supercharging the EV transition’ inquiry, BVRLA chief executive Toby Poston labelled the scheme “extremely fleet hostile”.
With BVRLA members expected to manage 1.5 million EVs and plug-in hybrids by 2027, Poston warned the policy is being introduced “in the wrong way at the wrong time”.
“This is not a marginal cost,” Poston told MPs. “It is a significant operational burden that ultimately feeds through to businesses and consumers. It adds unnecessary friction into a sector already investing heavily in decarbonisation.”
The industry has highlighted three major flaws in the current proposal:
- Physical Barriers: Leased vehicles are rarely inspected in person, making manual mileage verification a logistical nightmare.
- Reporting Complexity: Large fleets would require a massive infrastructure to estimate, report, and reconcile mileage.
- Downtime: Annual verification would force thousands of vehicles off the road, disrupting businesses across the UK.
BVRLA said that the policy in its current form risks becoming an “administrative headache,” adding friction and cost to businesses that are central to delivering the UK’s EV transition.
Evidence to the Transport Committee echoed these concerns, warning that additional costs will erode the total cost of ownership benefits of EVs and be passed on to customers, undermining affordability and confidence at a crucial point in the transition.
Fiona Howarth, founder of Octopus Electric Vehicles, spotlighted that the massive cost to fleets from eVED would also impact drivers, businesses and households who rely on these vehicles every day.
“With huge uncertainty over oil prices and supply, we should be accelerating the transition to electric. A pay-per-mile approach risks doing the opposite. It adds complexity and cost just as drivers are starting to see EVs as the simpler, better option.
“This is increasingly looking like the wrong tax at the wrong time.”
BVRLA members have also raised concerns that the policy sends the wrong signal to current and prospective EV drivers, particularly as it applies to vehicles already on the road.
Industry feedback highlights that the scheme risks penalising early adopters of EVs, and that it introduces additional hassle, uncertainty and perceived unfairness. The sector also says it conflicts with wider government messaging aimed at accelerating uptake.
The BVRLA is now calling on the Government to scrap the current design in favour of a technology-led, simplified system that aligns with how modern fleets actually operate, rather than penalising early adopters with an “administrative headache”.
