The government’s proposed pay-per-mile electric vehicle duty (eVED) could cost the UK’s fleet sector £260m a year by 2028 purely in compliance costs, according to analysis from the British Vehicle Rental and Leasing Association (BVRLA).

The trade body says the figure is based on member data and reflects both direct administration costs of around £75m and a further £185m linked to lost productivity when vehicles are taken off the road for mileage checks.

That combined burden would equate to roughly 10 per cent of the total revenues expected to be raised by the tax, although some BVRLA members estimate the real cost could climb to between 40p and 45p for every £1 collected – once wider operational impacts are taken into account. The figures do not include one-off implementation costs, the expense of mileage readings at approved centres or the tax itself.

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 increase significantly as fleet electrification continues.

Giving evidence to MPs as part of the Transport Committee’s inquiry into “Supercharging the EV transition”, BVRLA chief executive Toby Poston warned that the scheme, as currently structured, risks being introduced “in the wrong way at the wrong time.”

He described the policy as “extremely fleet hostile” and outlined a series of practical challenges facing operators. Vehicles on lease are rarely inspected in person, making accurate mileage collection more complex, while the system would require fleets to estimate, report, verify and reconcile mileage data across large numbers of vehicles. Annual verification processes would also mean additional downtime, taking vehicles temporarily out of service.

The BVRLA argues that, in its current form, the policy risks becoming an “administrative headache”, adding friction and cost to a sector that plays a key role in driving the UK’s transition to electric vehicles.

Evidence submitted to the committee also highlighted concerns that additional costs could erode the total cost of ownership benefits that have helped make EVs attractive to businesses and consumers, with any extra burden likely to be passed on to customers.

Toby Poston, CEO of the BVRLA, said: “Based on current fleet data, eVED would have cost rental, leasing and fleet operators around £185m 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. In return, the Treasury is expected to collect around £595m in eVED from the sector.

“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. It is an inefficient policy that adds unnecessary friction into a sector that is already investing heavily in decarbonisation.”

Concerns are also being echoed elsewhere in the industry. Fiona Howarth, founder and director of Octopus Electric Vehicles, said: “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.

“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.”

Industry feedback suggests the proposal could also 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 accelerating the shift to electric mobility.

The association is calling for ministers to work more closely with the industry to redesign the scheme, arguing that any future approach needs to be simpler, more technology led and better aligned with how modern fleets operate.