Motorists across the UK could be facing a significant change in the way they are taxed, with the government hinting at the possibility of a pay-per-mile road tax system in the upcoming October Budget. Here’s a breakdown of what this could mean for drivers and how it might impact different groups.
£1,110 Pay-per-mile Car Tax Will Charges
- Possible New Tax: The UK government is considering introducing a pay-per-mile tax for motorists.
- When? This change might be announced in the October Budget, although nothing is confirmed yet.
- Why Now? Prime Minister Sir Keir Starmer has hinted that the coming months could be tough for many Brits, which means the government is exploring new revenue sources.
How Would the Pay-Per-Mile Tax Work?
Currently, the Vehicle Excise Duty (VED) is based on the car’s engine size or its carbon emissions. However, the proposed system would switch to charging drivers based on their travel miles.
Aspect |
Current System (VED) |
Proposed Pay-Per-Mile System |
|---|---|---|
Basis for Tax |
Engine size or CO2 emissions |
Distance driven (per mile) |
Example of Charge |
Varies by engine/CO2 (e.g., £150/year) |
Estimated 15p per mile |
Electric Vehicles |
Set to pay tax from 2025 |
Would pay per mile traveled |
The potential rate mentioned is around 15p per mile, which means that an average UK driver traveling 7,400 miles per year could end up paying around £1,100 annually – a significant increase for many.
What Do Experts and Motorists Think?
Tom Banks, a car insurance expert at Go. Compare, has shed light on the growing concern among drivers:
- Unfair for Some: Many motorists worry that a pay-per-mile system could be unfair, especially for those who have no choice but to drive frequently.
- Impact on Regular Drivers: The new system could hit those who rely on their vehicles for work or personal reasons particularly hard.
Tom Banks’ Insights:
“The proposed idea of a pay-per-mile tax system raises concerns about its fairness, especially for those who need to drive more often for various reasons. It’s essential to consider these road users and avoid penalizing them for something beyond their control.”
Arguments For and Against the Pay-Per-Mile Tax
Supporters Say:
- It would be a fairer system for electric vehicle (EV) owners, who are currently exempt from road tax but must start paying in 2025.
- It could encourage people to reduce unnecessary car journeys, benefiting the environment.
Critics Argue:
- It could be seen as another way to extract more money from drivers, especially those who depend on their cars.
- It might unfairly impact people living in rural areas where public transport options are limited, forcing them to pay more just to travel.
How Will This Compare to the Current Road Tax?
If introduced at 15p per mile, the annual cost would be equivalent to what a car emitting 171-190g/km of CO2 currently pays under the VED system, similar to models like the Audi A6 or Jaguar XF Sportbrake.
Mileage |
Estimated Pay-Per-Mile Tax |
Equivalent Current VED Bracket (CO2) |
|---|---|---|
5,000 miles/year |
£750 |
151-170g/km CO2 |
7,400 miles/year |
£1,100 |
171-190g/km CO2 |
10,000 miles/year |
£1,500 |
Above 190g/km CO2 |
What Do Motorists Think About the Change?
According to a recent survey conducted by Go. Compare involving 2,000 drivers, the majority of motorists are not in favor of the proposed pay-per-mile system:
- 53% of drivers oppose introducing the pay-per-mile tax.
- Many believe that certain groups should be exempt from this tax due to their reliance on private vehicles.
Groups That Should Be Exempt (Survey Results):
Group |
Percentage in Favor of Exemption |
|---|---|
Disabled Drivers |
44% |
Retirees |
30% |
These findings highlight concerns that the pay-per-mile tax could be too burdensome for people who rely on their cars due to mobility issues or limited public transport options.
What’s Next?
While the pay-per-mile tax is still under discussion, it’s clear that it has stirred up a mix of opinions. Here’s what we know so far:
- No Decision Yet: The government hasn’t confirmed if this tax will be introduced or what the exact rate might be.
- Potential Impact: If implemented, the average UK driver could be paying significantly more each year, unless there’s some kind of cap or exemption system put in place.
Key Takeaways:
- The pay-per-mile tax system could mean a drastic shift in how road tax is calculated, moving away from engine size or emissions to distance traveled.
- Many motorists are concerned about how this change might affect those who need to drive regularly or have limited alternatives.
- Disabled drivers and retirees might be the most impacted and are seen as deserving of exemptions by a significant portion of the public.
Final Thoughts
The potential switch to a pay-per-mile road tax could be a game-changer for UK motorists, especially at a time when the cost of living is already high. While it aims to create a fairer system for electric vehicle owners and encourage reduced car use, there are valid concerns about its impact on those who rely heavily on their vehicles. As we wait for further announcements, it’s essential to stay informed and consider how this might affect you personally.
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