Pay-per-mile road tax UK: Everything you need to know

If you’re a driver in the UK, you may have heard rumours about a new pay-per-mile road tax system. This proposed change in taxation has been suggested by several parties, including the charity called Campaign for Better Transport. 

Under the current road tax system, drivers pay a fixed annual tax based on their vehicle's emissions, known as Vehicle Excise Duty (VED). However, the proposed pay-per-mile system would instead charge drivers based on the number of miles they travel on public roads.

Those in favour of the suggested system argue it would be a fairer approach, meaning that frequent drivers would pay more in taxes compared to motorists who travel infrequently. Additionally, they suggest that this system could help reduce congestion and emissions by encouraging people to drive less or opt for alternative modes of transport.

However, the proposed new road tax system has also faced criticism and concerns from many. Some worry about the potential privacy implications of tracking vehicle mileage, while others argue that the system could disproportionately impact certain groups, such as rural residents who may have access to fewer alternative public transport options.

As the debate surrounding the pay-per-mile road tax continues, we will delve into the specifics of the proposed system, who would be affected, and what the potential implications are for drivers around the country. Read on to find out more… 

What is the pay-per-mile road tax proposal?

The pay-per-mile road tax proposal in the UK is a concept that suggests replacing the current fixed annual Vehicle Excise Duty (VED) setup with a system that charges drivers based on the number of miles they drive on public roads. 

Key points of the proposal outline that drivers would be charged a certain amount for each mile driven, with the exact rate potentially varying based on factors such as vehicle type, emissions, or time of day. To determine this, it’s likely that GPS tracking or other technologies would be required to monitor and record the mileage driven by each vehicle.

Rather than a blanket change to how we pay road tax in the UK, it’s suggested that a phased introduction may be beneficial to motorists. Initially, the pay-per-mile system could instead happen gradually by applying it only to certain vehicle types, such as zero-emission vehicles before expanding it to all road-based vehicles.

It's important to note that no specific pay-per-mile road tax rates or implementation plans have been officially announced at all just yet. The proposal still remains a topic of debate and will need much more consideration before it can possibly be implemented. 

About Campaign for Better Transport

Campaign for Better Transport is a UK-based charity that advocates for sustainable transport policies. They support a shift towards public transport, walking, and cycling, while also promoting policies to reduce car dependency and its associated environmental and social impacts.

It probably comes as no surprise then that the Campaign for Better Transport initiative has been one of the prominent voices in support of a pay-per-mile road tax system in the UK. They argue that such a system would provide many benefits to all road users.

Which drivers would be affected by the pay-per-mile road tax?

The proposed pay-per-mile road tax system would in theory be introduced gradually if the proposals are anything to go by. Essentially, ALL drivers would be affected by pay-per-mile tax in the long run, but it’s expected that the new system will initially apply only to zero-emission vehicles before being expanded to all vehicles. However, none of this has yet been confirmed by any official authorities.

How would drivers be affected by pay-per-mile road tax?

Of course, the introduction of a pay-per-mile road tax system in the UK would likely have a significant impact on drivers, with the specific effects varying depending on individual circumstances and driving habits. 

To give you an idea of how everyday motorists could be affected by pay-per-mile road tax, we’ve outlined what we feel would be the biggest issues to overcome:  

Changes in Driving Costs

Under a pay-per-mile system, the cost of driving would become more directly tied to the distance travelled. Drivers who cover more miles would face higher taxes, while those who drive less may see a reduction in their road tax costs compared to the current fixed-rate system.

Impact on Household Budgets

Depending on current mileage and the specific tax rates incurred, some households may need to adjust their budgets to account for changes in their driving costs. This could be particularly challenging for low-income households or those who rely heavily on their vehicles for essential travel.

Concerns about Privacy

The implementation of a pay-per-mile road tax system would likely require some form of vehicle tracking or mileage reporting, which could raise privacy concerns among drivers who are uncomfortable with the idea of their movements being constantly monitored.

Fairness Considerations

While some argue that a pay-per-mile system would be fairer than the current fixed-rate road tax we are used to, there are concerns from many about the potential impact on certain groups, such as rural residents or those with limited access to alternative transport options.

Would any drivers be exempt from the pay-per-mile road tax?

Based on the ongoing discussions regarding pay-per-mile road tax in the UK and the need to consider fairness to all drivers, it's likely that certain groups of motorists could be considered for exemptions or reduced rates under such a system. Below, we’ve listed the groups of people who could potentially be exempt from paying pay-per-mile road tax:

• Disabled drivers
• Emergency service vehicles
• Agricultural vehicles 
• Public transport vehicles
• Low-income households
• Residents in remote or rural areas

The specific exemptions and reduced rates would need to be carefully and thoughtfully designed to strike a balance between the goals of the pay-per-mile system (such as reducing congestion and emissions) and the need to ensure fairness among vulnerable or disadvantaged groups of motorists.  

Where would the pay-per-mile road tax be enforced?

Based on the current proposals, the pay-per-mile road tax in the UK would likely be enforced on most, if not all, public roads, including the city of London. This means that drivers would be charged for the miles they travel on highways, major roads, and local streets maintained by the government.

But there’s no need to panic just yet as it’s important to understand that enforcing the pay-per-mile tax on every single road in the UK would be a complex and potentially costly undertaking. Because of this hurdle, some proposals suggest focusing initially on major roads and highways before potentially expanding the system to cover all public roads across the country.

Will there be a pay-per-mile road tax scheme in London?

The discussions around a pay-per-mile road tax system have been primarily focused on a potential nationwide system in the UK. As for London’s involvement, there are no concrete plans to include or exclude the capital city. 

Of course, London already has a separate road pricing scheme in place, known as the London Congestion Charge. This charge applies to most vehicles driving within the designated Congestion Charge Zone in central London during specified hours. The purpose of the Congestion Charge is to reduce traffic congestion in the city centre and encourage the use of alternative modes of transport.

If a national pay-per-mile road tax were to be implemented in the future, policymakers would need to consider how it would interact with existing road pricing schemes like the London Congestion Charge, and of course, the Ultra Low Emission Zone (ULEZ). They would need to ensure that drivers are not unfairly double-charged and that the systems work together effectively.

How much would the proposed pay-per-mile road tax be?

News reports from outlets such as The Express, The Times, and The Telegraph have published the pay-per-mile road tax proposal from Campaign for Better Transport, which could see drivers being charged a fee of around 2p per kilometre driven. 

This proposal comes as the government seeks ways to fill the potential £35 billion tax revenue gap caused by the increasing adoption of electric vehicles, which are currently exempt from the traditional Vehicle Excise Duty. The suggested fee is yet to have any kind of approval by authorities.  

What does the public say about pay-per-mile road tax? 

It probably comes as no surprise that according to a survey conducted by Go Compare, public opinion on the proposed pay-per-mile road tax in the UK appears to be divided among drivers. While some people see the potential benefits of a fairer and more environmentally friendly road tax system, others have concerns about the practical implications and potential unintended consequences, which is certainly fair to say.

The Go Compare survey reached out to 2,000 drivers and here’s a summary of some of the key findings:

• 26% of UK drivers were in favour of switching from the current road tax system to the pay-per-mile proposal
• 53% of UK drivers were against the proposed pay-per-mile road tax changes
• 44% of motorists said disabled drivers should be exempt from pay-per-mile road tax (or be heavily discounted)
• 26% of motorists think that all drivers should have to pay the same rate regardless 
• 34% of motorists think those who drive a zero or low-emission vehicle should be exempt or discounted 

Stay up-to-date with pay-per-mile road tax news and more!

If you’re a driver in the UK, you no doubt like to keep your fingers on the pulse when it comes to issues that may affect your motoring habits. Here at Octane Finance, we make it our mission to keep our customers updated with all the current automotive news. Our News section is brimming with helpful guides, top tips, and the latest stories that will help steer you in the right direction.