EV pay-per-mile tax proposals could impose significant new costs on the UK’s fleet sector, with industry analysis suggesting compliance alone may reach £260 million annually by 2028. The findings raise concerns about the timing and structure of road pricing reforms as the UK seeks to accelerate electric vehicle adoption.
According to the British Vehicle Rental and Leasing Association (BVRLA), the projected cost includes approximately £75 million in direct administration and £185 million in lost productivity due to vehicles being taken off the road for mileage verification.
The organisation estimates that these costs could represent around 10% of total revenues raised by the scheme, with some operators suggesting the true cost could rise to between 40 and 45 pence per £1 collected when wider operational impacts are considered.
EV pay-per-mile tax raises concerns over fleet operations and efficiency
The proposed EV pay-per-mile tax is being examined as part of wider discussions on how to replace declining fuel duty revenues as the transition to electric vehicles accelerates. However, industry representatives argue that the current model may introduce operational complexity at scale.
Fleet operators, which play a central role in the UK’s vehicle market, face particular challenges due to the structure of leasing and rental models. Vehicles are often distributed across customers and locations, making consistent mileage tracking and verification more difficult.
Evidence presented to the UK Transport Select Committee highlighted several operational concerns, including the need to estimate, report and reconcile mileage data across large fleets, as well as the potential for vehicle downtime linked to annual verification processes.
These factors could reduce fleet utilisation and increase administrative burden, particularly as the number of electric vehicles in operation continues to grow. BVRLA members currently operate approximately 1.1 million battery electric and plug-in hybrid vehicles, with this figure expected to reach 1.5 million by 2027.
Toby Poston, Chief Executive of the BVRLA, told the Committee that the policy risks adding friction to a sector already investing heavily in decarbonisation:
“Based on current fleet data, eVED would have cost rental, leasing and fleet operators around £185 million in 2025 through a combination of administration and vehicle downtime. That rises to roughly a quarter of a billion pounds by 2028 as fleets grow.
“This is not a marginal cost. It is a significant operational burden that ultimately feeds through to businesses and consumers who rely on these vehicles every day.”
Industry voices have also raised concerns about the broader impact on the transport transition, particularly at a time when affordability and simplicity are key drivers of EV adoption.
Fiona Howarth, Founder and Director of Octopus Electric Vehicles, said:
“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.”
Beyond cost, stakeholders warn that the policy could send mixed signals to consumers. Concerns include the potential to penalise early adopters, introduce uncertainty around running costs and undermine wider government messaging aimed at encouraging EV uptake.
As discussions continue, industry groups are calling for a simplified, technology-enabled approach that better reflects real-world fleet operations while supporting the UK’s long-term decarbonisation goals.
