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Pay-per-mile road UK: what you need to know

What is the pay-per-mile scheme and what could it mean for UK drivers?

There's plenty of news about the UK introducing a pay-per-mile charging system - but what does that mean?

It’s all to do with the anticipated £35 billion tax shortfall that’s incoming as motorists continue to switch to electric vehicles before the ban on sales of new petrol and diesel cars in 2035.

Thanks to the reduced rates or even tax-free status of electrified cars, income from road tax has already taken a hit as EV sales rise.

So, Ministers in the transport committee are reportedly planning on introducing a road pricing network to claw back some of that lost money.

The system would replace the current Vehicle Excise Duty (VED) car tax system currently in place, meaning drivers will instead pay tax based on their annual mileage.

Will you pay more?

In theory, no. Ministers in the cross-party Commons transport select committee claim that motorists could expect to pay about the same as they currently do in car tax (aka vehicle excise duty) per year, because the pay-per-mile rates will reflect not only how much you travel, but also how ‘clean’ your car is.

Lower polluting cars will get lower rates, much like they do in the current tax system, although electric car owners would no longer be able to avoid paying.

Why is pay-per-mile the preference?

Using a pay-per-mile system will not only generate the income needed to cover the anticipated road tax shortfall – which is a key contributor to the government’s overall tax pot - it will also, we’re told, act as a deterrent for unnecessary uses of cars of all types.

This would help to reduce congestion, especially if proposed variable rates of road charging were used, with high-traffic hours costing more than low-traffic ones.

When could it happen?

The committee had called for the UK Government Treasury and Department for Transport to establish a body to develop a scheme by the end of 2022.

But, actual implementation is likely to take much longer. Not only would it be an enormous challenge to roll out enough numberplate recognition cameras on the UK’s road network to make such a digital system work, Sadiq Khan – who has previously flirted with the idea of a similar system for London – has suggested the technology isn’t quite ready yet.

The RAC Foundation, a UK motoring think tank, is in support of a road pricing system to cover the tax shortfall but warned in a statement that there’s “the temptation to create an over-complex system that’s expensive to run”.

Cutting-edge technology will be vital in ensuring things run smoothly, both for the division in charge of managing the system, and for the motorists paying to use it.

Will road pricing force me to drive a different car?

There’s little reason to think a road pricing system will affect motorist car buying decisions, because – as stated earlier – little is expected to change when it comes to annual costs.

Admittedly, the financial incentive to switch to electric cars will be slightly reduced as their tax-free status will be superseded by the road charging, but the UK’s growing appetite for EVs is unlikely to slow - not least because of the government’s 2030 ban on the sale of new petrol and diesel cars.

Rest assured, used petrol and diesel cars will remain legal beyond 2035, which means there’s no need to worry – you’re still free to choose whatever car type you like.