New pay-per-mile car tax update saves state pensioners from £249 charge

A government update has saved state pensioners from a £249 annual pay-per-mile car tax charge. Motorists had feared pay-per-mile car tax will be rolled out by the new Labour Party government, with Chancellor Rachel Reeves delivering her Budget on October 30.

There were fears state pensioners could fork out £249 under the car system, with the shake-up meaning pensioners face a £20 a month charge for doing just average mileage for their age group. But now the Department for Transport has ruled out the system.

In an official statement, a Government spokesperson said: “We have no plans to introduce road pricing. 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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Specialists at GM Direct Hire have predicted costs could work out at around 15p per mile. If proven correct, it means over 70's will be targeted with a £20.81p charge every month or around £249 every year. Other predictions had ranged from 2p to 6p.

Average older drivers travel just 138.75 miles on average every month. The Campaign for Better Transport and the RAC were among those calling for the shake-up, with motoring groups urging the government to change the way car tax is paid.

If the model had been introduced, it would have potentially seen the current road tax and fuel duty revenues rolled into one pay-as-you-drive fee.Campaigners argue that a pay-per-mile model would be a fairer way of charging motorists up and down the country.

The Department for Transport (DfT) has already made the decision to introduce vehicle excise duty (VED) on electric cars from April 2025, and move the petrol-diesel phase-out back to 2030, after winning the General Election back in July.

But now it has been confirmed it won't go ahead by Labour.