The British Vehicle Rental and Leasing Association’s (BVRLA) report has found that the auto rental industry will be unfairly affected by the government’s decision to increase vehicle excise duty rates, according to a report by Asset Finance International.

The U.K.’s new vehicle excise duty (VED) is going to hit the car rental industry with a 400% tax rise, says the report. Additionally, the government will remove the ability to claim a refund for any unused first-year tax after April 1, 2017.

Commissioned by the BVRLA, a new report by Oxford Economics has found the average duty paid for rental cars, which typically has a fleet life of nine months, will increase from 36 pounds in 2016 to 170 pounds from April 2017.

With this increase, the rental industry’s overall first-year VED will rise 400% -- from 11 million pounds in 2016 to 55 million pounds in 2017, according to the report. The lack of refund will be responsible for 14 million pounds of the total in 2017.

In its 2017 spring budget submission, the BVRLA has asked the UK government to defer or stagger the VED increases and keep the ability for owners to obtain a full refund of any tax outstanding when a car is sold in the first year, says the report.

“Our members are facing a 400% increase in one of their main tax bills, and the inability to claim a refund on any unused portion of the VED is totally inconsistent with usual U.K. tax policy,” Gerry Keaney, chief executive of the BVRLA, told Asset Finance International.

U.K.’s car rental industry buys around 324,000 cars per year, but that number will likely fall as companies lengthen their operating cycle to reduce the cost impact of the new VED regime, says the report.

Click here for the full Asset Finance International report.