A per-mile charge would have seen drivers pay based on every journey(Image: (Image: Getty))

Pay-per-mile car tax 'axed' with Government confirming 'no plans' to introduce new fee

The Government has finally broken its silence on the proposed pay-per-mile car tax - and it's bad news for motorists

by · NottinghamshireLive

The Government has quashed rumours of a pay-per-mile car tax system, confirming that "no plans" exist to introduce such a charge. Speculation had been mounting about the potential for a pay-per-mile scheme to replace the current Vehicle Excise Duty (VED), especially after Adam Smith, chief of staff to former chancellor Jeremy Hunt, acknowledged the Treasury's work on a road pricing project.

Campaign group FairFuelUK hinted at the possibility of an announcement in the Autumn Budget, while automotive experts pondered the potential cost implications. However, with Rachel Reeves set to reveal her financial strategies soon, the idea of pay-per-mile has been officially abandoned. A Government spokesperson said: "We have no plans to introduce road pricing."

They added: "We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets." In lieu of the speculated changes, the Department for Transport (DfT) has confirmed that from April 2025, electric and hybrid cars, vans, and motorcycles will be subject to VED. This move was first disclosed in the 2022 Autumn Statement, marking the first time electric vehicles (EVs) will incur this tax, reports the Express.

The DfT also noted that EVs would continue to enjoy more favourable first-year rates of VED compared to their petrol and diesel counterparts. Furthermore, the Government remains dedicated to enhancing the network of charging points and reaffirms its commitment to ending the sale of new internal combustion engine vehicles by 2030.

A pay-per-mile road pricing system, which would charge individuals for each trip they make instead of a flat £190 annual VED fee, has been proposed. The Resolution Foundation had previously suggested a charge of around 6p per mile across the UK.

However, G&M Direct Hire claimed last week that a staggering 15p per mile rate could be introduced. The scheme has also raised privacy concerns, with motorists worried about how their miles would be tracked.