By Oliver Holt, sales manager UK and Ireland, Geotab The UK is on the cusp of the biggest transportation shift in history to electric vehicles. But just as
By Oliver Holt, sales manager UK and Ireland, Geotab
The UK is on the cusp of the biggest transportation shift in history to electric vehicles. But just as momentum builds, the new EV tax to be announced in the Autumn Budget could be hitting on the brakes.
For the fleets responsible for the majority of the UK’s zero-emission miles, the 3p per mile tax is an unnecessary cost at exactly the wrong moment. Instead of accelerating progress, the policy risks discouraging the organisations that carry the weight of the transition so far, sending the wrong message entirely.
The rationale behind the tax is fairness as fuel duty declines – but applied now, it punishes the firms driving the transition to cleaner transport. For the everyday car owner driving 10,000 miles a year, an extra £300 a year may not seem too daunting. But for a fleet of, say, 30 vehicles, travelling twice that distance, an added annual cost of £18,000 will be a tough pill to swallow.
Fleet adoption has been one of the strongest contributors to EV growth in the UK. These early movers buy at scale, helping to stabilise second-hand markets, deliver the majority of zero-emission miles, and prove commercial viability. Penalising utilisation at this stage could undermine the good progress that has been made.
Critically, EV taxation is also arriving before electrification is anywhere near widespread enough. While SMMT data showed a record number of EV registrations in September 2025, overall market share for battery electric vehicles is still only at 23.3%. Our own research has also shown a wide disparity in EV adoption across UK city council fleets, with TfL reporting that just 3.2% of its HGVs and vans are electric. Instead of encouraging lagging regions to accelerate, a usage tax risks doing the opposite, cooling momentum. A new long-term risk is created for those fleets making investment decisions with 5-10 year horizons, which could cause uneasiness around future commitment to EV infrastructure.
Meanwhile, other European countries are strengthening their incentives, instead of imposing new costs. Across the EU, governments continue to offer purchase grants and reduced road taxes to accelerate EV uptake.
Fleets were pushed to accelerate EV uptake under the ZEV mandate. Now, those same fleets are being taxed for doing exactly what government policy encouraged. Mixed messaging such as this undermines confidence and risks slowing investment in vehicles, depots and infrastructure.
The misconception that ‘3p is minimal’ also carries dangerous complacency. Those not currently affected must bear in mind that as ICE vehicles fade out, fuel duty collapses and the tax base shrinks – leading to an inevitable rise in per-mile charges. Delaying electrification now could mean higher costs later down the road, with fewer ICE vehicles in circulation and steeper per-mile rates needed to close the revenue gap.
Fleets can take pragmatic steps to mitigate risk, such as using telematics data to model mileage sensitivity and TCO impacts, and by optimising routes and charging to keep operational costs under control. But in this scenario, these are defensive measures.
If the UK is serious about hitting ZEV mandate targets, zero-emission miles should be rewarded, not punished. A usage tax may certainly be appropriate in the long-term once EVs are dominating the road network, but early-stage electrification requires stability and a clear incentive programme. The path to net zero needs more fleets going electric, with a policy that supports growth before taxing it.
