Pay-Per-Mile is Bound to Increase the Cost of Everything

One of the many PR `kites’ being flown by Chancellor Rachel Reeves’ office this month has been pay-per-mile (PPM) for EV cars and vans. It sounds good in that the cash could be used to repair the UK roads, or even build some new ones. But in reality of course any cash goes into the Treasury and is never ring fenced. 

But the other fact is that the cost of delivering goods or services also depends on overheads like car or vehicle usage, including taxes like fuel duty, VED, or PPM. It all adds up. If this goes ahead then not only will people be less likely to rent or buy an EV, but the cost of food, online delivered goods and services like insurance, will all rise, as overheads rise too.

Here’s some comment;

Jonathan Haseler, Chief Revenue Officer at Radius, comments: 

“The announcement of plans to introduce an electric vehicle tax, where EV drivers would face a 3p charge per mile, has prompted significant discussion across the industry. Until now, EV drivers have benefited from relatively favourable tax treatment, which has helped accelerate adoption. Introducing additional costs for high‑mileage business users, such as fleets and leased vehicles, risks slowing that momentum at a critical stage, so it’s unsurprising that the news has generated mixed reactions on social media.

“The change means that businesses relying on high‑mileage EV vehicles, such as fleets, shared mobility, or leased models, will need to factor in additional running costs. Ultimately, the shift to a pay‑per‑mile model makes cost certainty and operational efficiency more critical than ever. 

“With the tax set to start in 2028, fleet drivers may face uncertainty over future costs and charging, which could make fleet managers hesitant to invest more into EVs. Introducing this tax now risks slowing the pace of EV adoption, and maintaining supportive policies for business EVs should remain the priority.

“For a vehicle driving 20,000 miles a year, the new charge could add around £600 in annual running costs. At this stage, predictable costs and continued support for EV uptake are essential to keep businesses moving toward electric fleets.”