Drivers handed £1,125 each after car tax u-turn from Labour

Drivers have been handed £1,125 each after the new Labour Party government u-turned over pay-per-mile car tax. Experts at The Electric Car Scheme suggested a 15p-per-mile charge was on the cards, an updated system could be a massive financial headache.

Based on these figures, the average driver would pay around £1,125 to use the roads over a 12-month period. But now the Treasury, after much criticism, has confirmed the pay-per-mile car tax system and Vehicle Excise Duty scheme will NOT be introduced.

“We have no plans to introduce road pricing," they told Birmingham Live. “We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”

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John Wilmot, CEO of car leasing comparison site LeaseLoco explained: “It’s also a relief for many car owners that Reeves resisted introducing a pay-per-mile vehicle tax, which would have raised costs for those most reliant on their vehicles.”

Lorna Macpherson, motor finance expert at Ocean Finance, warned road users, motorists and drivers may decide not to leave their driveway altogether if they knew they would pay more. Lorna explained: “This shift could encourage more mindful driving habits; if drivers are more aware of how each mile affects their costs, they may start rethinking unnecessary trips and car journeys.

“This could lead to fewer cars on the road, which would help reduce congestion and lower emissions.” A "pay-per-mile" scheme sees road users paying a charge based on how far they travel over a certain period. This is different to the current fuel tax, which is based on how much petrol or diesel you buy. This could result in higher costs for those who drive more frequently or over longer distances.

To implement pay-per-mile road pricing, the government would need to track the distance each vehicle travels. This could be accomplished using various technologies, such as GPS-based trackers, Automatic Number Plate Recognition (ANPR) cameras, or smartphone apps.