BIG EXTRA EXPENSE INCOMING: Addison Lee warns new EV mileage tax could add £840 a year to private hire driver costs
- Perry Richardson
- 9 minutes ago
- 2 min read
Addison Lee has criticised the Government’s decision to press ahead with the introduction of Electric Vehicle Excise Duty (eVED), warning the new mileage-based charge will increase operating costs for taxi and private hire drivers already facing mounting financial pressures.
The Government this week confirmed that eVED will be introduced from 1 April 2028 following a public consultation. The scheme will apply to battery electric vehicles, plug-in hybrid cars and hydrogen-powered cars through a mileage-based charge paid alongside Vehicle Excise Duty. Ministers say the measure is intended to replace declining fuel duty revenues as more motorists switch to electric vehicles, while avoiding the need for GPS tracking or location monitoring.
Reacting to the announcement, Patrick Gallagher, CEO of Addison Lee, said the policy comes at the wrong time for the private hire sector.
Gallagher said: “Confirmation that eVED will proceed from April 2028 as a pay-per-mile charge on electric and plug-in hybrid vehicles is a blow to our industry, at a time when operators need support, not new charges.
“Taxi and private hire drivers deliver essential, high-mileage, door-to-door transport services and play a critical role within the wider public transport system. A uniform pay-per-mile charge that doesn’t differentiate between private and commercial use risks placing a disproportionate burden on our sector.”
Addison Lee estimates the new levy could cost electric vehicle drivers operating on its fleet up to £840 a year, while plug-in hybrid drivers could face £420 annually. Gallagher also highlighted the removal of London’s Congestion Charge exemption for electric vehicles, which he said already adds around £4,700 a year to EV running costs for affected drivers.
The operator also raised concerns over licensing disparities between different local authorities. Gallagher argued that drivers licensed in areas with less stringent environmental requirements, and operating older internal combustion engine vehicles, could gain a competitive advantage over operators that have invested heavily in cleaner fleets to comply with tougher standards.
He added: “We’re also concerned about cross-border hiring, where a patchwork of local licensing lets drivers from outside stringent areas, running older ICE vehicles, undercut those of us who’ve invested in cleaner fleets to meet higher standards.
“The last thing operators need is more costs, complexity, and administrative burden. Government should be clearing the road for electrification across our industry, not putting up new barriers.”
Under the confirmed eVED framework, motorists will report their vehicle mileage as part of the existing VED renewal process rather than through vehicle tracking technology. The Government says the system has been designed to protect privacy while ensuring electric vehicle users contribute towards road funding in a similar way to petrol and diesel motorists, who currently pay fuel duty based on fuel consumption. Cars will be within the scheme from April 2028, while vans, buses, coaches, motorcycles and HGVs are excluded at launch.
The Treasury expects the measure to raise more than £1 billion during its first year of operation, with revenues increasing as electric vehicle adoption grows. Around 5.6 million vehicles are expected to be affected during the 2028-29 financial year.
