UK trade association BEAMA warned the Government that a proposed pay-per-mile tax on electric vehicles could cost the UK economy up to £4.8 billion. The organization described the Electric Vehicle Excise Duty (eVED) as a “fiscal own goal” that will cost more than it raises in tax revenue.
BEAMA joined forces with ChargeUK, REA and EVA England to demand a pause on the tax’s introduction. The coalition wants further investigation into the policy’s economic impact.
The electrotechnical sector trade body says the eVED could cost up to £4.8 billion in lost sales and company costs by 2031. That’s against projected tax income of around £4.3 billion during the same period.
The warning is based on New Zealand’s experience with a similar pay-per-kilometer policy – EV sales dropped by 50% after implementation.
Tax Structure and Driver Impact
The planned eVED charges EV owners 3 pence per mile on top of the existing £200 annual standard Vehicle Excise Duty.
The Office for Budget Responsibility estimates a driver covering 8,500 miles annually would pay an additional £255 per year.
Vicky Edmonds, CEO of EVA England, said the proposals “risk leaving EV owners out of pocket and eroding confidence amongst those thinking about making the switch to electric.”
The £4.8 billion figure assumes companies and drivers delay EV purchases without buying petrol or diesel alternatives. Even if drivers choose combustion engines instead, the research projects losses of £630 million in VAT receipts and £260 million in compliance costs for car leasing companies.
Industry Calls for Delay
The coalition wrote to Daniel Tomlinson MP, Exchequer Secretary to the Treasury, requesting the eVED be delayed until 2030 – when pure petrol and diesel sales face a ban.
Introducing the pay-per-mile policy early is a fiscal own goal. It will slow EV uptake, reduce EV charging investments, and cost the UK economy more than the Treasury stands to raise with the taxation.
Matt Adams, head of electrical transport systems at BEAMA, said delaying to 2030 could provide “essential stability.”
Mark Constable, head of transport policy at green economy trade association REA, called the current policy “simply not fit for purpose.”
Jarrod Birch, head of policy at ChargeUK, described it as “another contradiction at the heart of government’s EV policy.”
The industry groups argue the timing undermines the Government’s broader electrification goals and could damage investor confidence in the charging infrastructure sector.
