New pay-per-mile car tax could cost UK drivers up to £1,100 annually

UK motorists have been alerted to a potential new charge that could be implemented as part of the October Budget. Prime Minister Sir Keir Starmer has warned that the coming months will be 'painful' for many Brits, leading some to speculate that road tax may transition to a pay-per-mile system.

Tom Banks, a car insurance specialist at Go. Compare, pointed out that an increasing number of drivers are worried that this system could unfairly penalise certain motorists.

He said: "The proposed idea of a pay-per-mile tax system brings questions around the fairness of the scheme, particularly to those who must drive more often for various reasons. Our report shows that drivers are concerned about what this means for these road users."

"While a pay-per-mile method could discourage unnecessary vehicle use, considering those who need to drive will be very important to make sure they're not being penalised for something out of their control."

The current Vehicle Excise Duty (VED) system charges motorists based on the size of their car's engine or its carbon dioxide emissions, but a pay-per-mile system would charge drivers based on how many miles they drive. Advocates of a pay-per-mile tax system argue that it would be fairer for owners of electric vehicles, who will be required to pay road tax for the first time in 2025, reports the Express.

However, some critics have expressed concerns that this could be another method of extracting more money from motorists, causing them to reconsider using their cars for certain trips.

At present, it remains unclear whether the Government will implement a pay-per-mile tax system or what the rate for drivers will be. Some suggestions indicate it could be set at 15p per mile.

Given that the average UK driver covers 7,400 miles annually, this rate would mean an astonishing £1,100 in road tax each year unless the government introduces a cap on the total amount payable.

Compared to the current road tax system, this is roughly equivalent to a vehicle emitting between 171 to 190g/km of CO2 - such as an Audi A6 or a Jaguar XF Sportbrake.

A Go. Compare study of 2,000 drivers found that 53 percent of motorists are against the introduction of a pay-per-mile tax scheme in the UK.

The survey by the company revealed that many believe certain drivers should be exempt from the tax, especially those who rely on a private vehicle for mobility.

44 percent suggested that disabled drivers should be exempt from the pay-per-mile system, while an additional 30 percent said retirees should also be exempt.