Rachel Reeves is preparing to hit electric vehicle drivers with a new 3p-per-mile tax from 2028, threatening to penalise the very courier companies and self-employed drivers who invested heavily in green fleets after years of government pressure to ditch diesel.
The Chancellor will announce the scheme in her Budget on November 26th, framing it as necessary to replace falling fuel duty revenue as drivers transition away from petrol and diesel vehicles.
But for courier companies like DPD, Amazon, and Royal Mail who’ve collectively spent hundreds of millions electrifying their fleets, the move represents a financial kick in the teeth just as they’re trying to make the economics of EVs stack up.
The Pay-Per-Mile Tax That Punishes Going Green
Under the current proposals, EV drivers will pay an estimated £250 annually based on average mileage, charged on top of existing Vehicle Excise Duty.
For courier drivers covering significantly higher mileage than average motorists, the costs will be substantially steeper.
A self-employed courier driving 30,000 miles annually (not uncommon in the industry) would face a £900 annual charge, whilst their diesel-driving competitors continue paying fuel duty at the pump.
The scheme will be aligned with annual VED payments, with drivers asked to estimate their yearly mileage and pay upfront. If they drive more than estimated, they’ll need to top up their payment.
Hybrid vehicles will also be charged, though at a lower rate than fully electric models.
The Courier Companies Who Bet Big on Electric
The timing couldn’t be worse for major courier operators who’ve made substantial investments in electric fleets following years of government encouragement and regulatory pressure from Clean Air Zones.
DPD has deployed over 4,000 electric vehicles across its UK network, achieving 100% electric deliveries in cities like Oxford and aiming for all-electric operations in the UK’s 30 largest towns and cities.
Royal Mail has rolled out over 5,000 electric vans with thousands more on order as part of replacing its ageing diesel fleet of around 45,000 vehicles.
Amazon has invested heavily in custom-built Mercedes-Benz eSprinters and micromobility hubs using e-cargo bikes in city centres as part of its Climate Pledge to reach net-zero carbon by 2040.
These companies justified the 30-50% higher upfront costs of electric vans by calculating long-term savings on fuel, maintenance, and avoiding Clean Air Zone charges.
The new per-mile tax fundamentally changes those calculations, potentially wiping out the economic advantages that made electrification viable in the first place.
Self-Employed Drivers Stuck Between Diesel Charges and Electric Taxes
For the thousands of self-employed courier drivers operating as independent contractors for companies like Amazon Flex, Evri, and DPD, the new tax creates an impossible dilemma.
Current estimates suggest less than 10% of self-employed couriers use electric or hybrid vehicles, with the vast majority still running diesel vans and cars due to high purchase prices, limited charging infrastructure, and payload concerns.
Many who’ve already made the switch to electric are now facing the prospect of being financially penalised for doing exactly what successive governments told them to do.
Those who stuck with diesel will continue paying fuel duty as before, but now have even less incentive to invest in expensive electric vehicles that come with additional per-mile taxation on top of higher purchase prices and operational challenges.
The “Poll Tax on Wheels” Accusation
AA president Edmund King warned the scheme risked becoming “a poll tax on wheels” and could slow down the transition to electric vehicles that the government claims to support.
He questioned whether the Government had struck the right balance, noting: “On the one hand, they are paying grants for new EVs. On the other hand, there are proposals for a pay-per-mile extra tax, which could put some people off.”
The enforcement questions also remain unanswered. Unlike fuel duty which is simply collected at the pump, the new scheme would require drivers to prove their mileage, potentially through photographs of odometer readings or electronic monitoring.
The Driver and Vehicle Licensing Agency will oversee the new tax, though exactly how they’ll verify claimed mileage for millions of vehicles hasn’t been detailed.
What This Means for the Courier Industry
The Treasury estimates the scheme will raise £1.8 billion by 2031, helping the Chancellor repair public finances by extracting money from the very drivers who responded to government incentives to go green.
For courier companies with large electric fleets, this represents an unexpected ongoing cost that wasn’t factored into their electrification business cases.
For self-employed drivers considering the switch to electric, it’s yet another financial barrier added to the existing challenges of high purchase prices, limited charging infrastructure, and payload limitations.
And for the courier industry as a whole, it sends a clear message: government policy on vehicle emissions is fundamentally unreliable, with the goalposts liable to shift whenever Treasury revenue needs demand it.
The new tax won’t take effect until 2028, giving the industry time to recalculate whether electric vans still make financial sense, or whether sticking with diesel and paying fuel duty represents the safer bet.
Rachel Reeves’s proposed 3p-per-mile tax on electric vehicles threatens to undermine years of courier industry investment in green fleets, penalising companies like DPD, Royal Mail, and Amazon who spent hundreds of millions electrifying their operations whilst creating fresh barriers for self-employed drivers already struggling with the higher costs of switching from diesel.
Want to know more about delivery companies and how they’re performing?
Check out our courier information section or browse our retailer guides to see which delivery companies your favourite shops are using.
