Chancellor Rachel Reeves's planned 2028 pay-per-mile tax on electric vehicles (EVs) will create a 'postcode penalty' that hits rural and low-income drivers hardest, according to an analysis by the British Vehicle Rental and Leasing Association (BVRLA). The study, which combined mileage data with child poverty statistics, found some drivers could pay up to £267 annually on top of standard Vehicle Excise Duty, with the highest costs concentrated in Scotland and deprived English constituencies.

Why Scotland's Stirling and Strathallan tops the mileage list at 6,827 miles

According to the BVRLA report, three Scottish constituencies lead the nation in average annual mileage: Stirling and Strathallan (6,827 miles), Dumfriesshire, Clydesdale and Tweeddale (6,823 miles), and Caithness, Sutherland and Easter Ross (6,711 miles). For EV drivers in those areas, the proposed 3 pence-per-mile charge translates to annual eVED costs between £201 and £205. Plug-in hybrid (PHEV) owners, taxed at 1.5 pence per mile, would pay just over £100. The high mileage stems from limited public transport options in rural Scotland, forcing residents to rely heavily on private vehicles.

The Treasury expects the electric vehicle excise duty (eVED) to close a growing fiscal gap. As petrol and diesel sales decline, fuel duty receipts are falling—the Office for Budget Responsibility (OBR) estimates this shortfall at roughly £1 billion per year,as the source notes. The government aims to recoup that lost revenue by taxing EV use for the first time.

The £267 annual surcharge facing drivers in Hayes & Harlington and South West Norfolk

Some English constituencies face even steeper charges. The BVRLA analysis identifies Hayes & Harlington, Ely & East Cambridgeshire, Doncaster East, and South West Norfolk as areas where EV drivers will see annual eVED costs exceeding £250. In South West Norfolk, the figure reaches £267—on top of the standard £200 VED rate. These are regions where car ownership is nearly mandatory due to sparse public transit, and household incomes are often below the natinal average.

The report also highlights a connection between deprivation and tax burden. Many of the UK's most deprived constituencies, measured by child poverty rates from the House of Commons Library,will see EV drivers paying over £200 in eVED charges. Birmingham Ladywood, which has the highest child poverty rate in the UK at 53.8 per cent, is one such example.. Similarly, drivers in Bradford West—ranked third for child poverty—will see running costs rise by more than £200.

London's Cities of London & Westminster: a £116 contrast to Birmingham Ladywood's £200-plus levy

The BVRLA study reveals a sharp geographic divide. In London, the ten least-affected constituencies all have median mileages below 4,000 miles per year, resulting in eVED charges of about £120 for EV owners. The Cities of London & Westminster, one of the nation's most affluent areas, will see an annual levy of just £116. In contrast, Birmingham Ladywood's EV drivers face more than £200. This disparity stems from London's extensive public transport, cycling infrastructure, and lower car dependency. The BVRLA dubs this an 'EV postcode penalty'—a system that structurally disadvantages drivers who are least able to reduce their mileage and least likely to have access to alternatives.

Chief Executive Toby Poston cautioned that while the policy may appear fair on paper, in practice it falls hardest on the drivers least able to avoid it. The analysis underscores the need for a more nuanced approach to EV taxation that considers regional disparities in mobility, income, and infrastructure.

What remains unknown:will the flat per-mile rate be adjusted before 2028?

The BVRLA analysis raises several open questions . First, will the government adjust the flat 3 pence-per-mile rate to reflect regional differences in mileage necessity and charging infrastructure? The current design ignores the vast variation in travel patterns across the UK. Second, what compensatory measures might accompany the eVED for rural and low-income households? The report notes that higher insurance premiums and rising charging costs already strain budgets—the added levy risks further discouraging EV adoption. Third, how will the Treasury ensure that the transition to electric vehicles remains equitable? As the 2028 implementation date approaches, debate is likely to intensify over whether the eVED entrenches existing geographic and economic divides.