Car road tax: what is pay-per-mile vehicle road pricing, cost, how much is it - how would it work in the UK?

• A pay-per-mile tax would charge drivers based on the miles they drive, using tracking technology to calculate fees
• As more electric vehicles (EVs) reduce fuel duty revenue, the system could ensure all vehicles contribute to road maintenance
• Charges may vary based on factors like vehicle type, emissions and driving location, with cleaner vehicles potentially paying less

Ahead of Rachel Reeves’ budget in October, critics seized on the government’s refusal to rule out the introduction of a “pay-per-mile” tax system, otherwise known as road pricing.

At the same time, the Tony Blair Institute suggested that such a scheme should be introduced “immediately”, in an effort to reform motoring taxes.

That speaks to the politically toxic and divisive nature of the debate - in 2007, the Blair government’s efforts to introduce road tolling faced a massive public backlash, with a record number of people signing a parliamentary petition in protest.

The budget has since been and gone (a government spokesperson has since clarified there are “no plans to introduce road pricing”), but what exactly is pay-per-mile, how would it work - and how much would you have to pay?

Here is everything you need to know.

What is a pay-per-mile tax?

A pay-per-mile road tax is a system where drivers are charged based on the number of miles they drive, rather than the amount of fuel they consume.

Under such a system, vehicles could be equipped with technology to track the distance driven, with the data then transmitted to a central system, where charges would be calculated.

Drivers could be billed monthly, quarterly or annually based on the miles driven, and there could be different rates depending on factors such as time of day or road type.

The system could be flexible, with varying rates based on specific factors like vehicle weight, emissions or the location where the driving takes place. For example, there could be higher charges for driving in congested urban areas to reduce traffic.

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Why could it be introduced in the future?

As the uptake of hybrid and electric vehicles (EVs) increases, the government loses out on fuel duty, which is a significant source of revenue for maintaining and developing road infrastructure.

EVs, which are currently exempt from fuel duty, don’t contribute to road maintenance costs in the same way that traditional petrol and diesel vehicles do.

A pay-per-mile system could provide a steady and reliable revenue stream to maintain and upgrade the road network.

With fewer cars using fuel and paying fuel duty, this type of tax could ensure that all vehicles contribute fairly to road infrastructure, regardless of their fuel type.

By tying taxes to mileage rather than fuel use, the government could also incentivise drivers to use roads more efficiently, avoid unnecessary trips or adopt cleaner alternatives, thus reducing congestion and carbon emissions.

But setting up a nationwide pay-per-mile system could be costly, requiring investment in tracking technology, infrastructure and the administrative systems to manage billing and enforcement.

How much would I have to pay?

It’s unclear just how much drivers would be asked to pay under a pay-per-mile system, but it’s likely that there could be differentiation in charges based on a vehicle’s emissions, to align with the government’s environmental goals.

Conventional petrol and diesel vehicles, especially those with higher emissions, could be charged at a higher rate, discouraging the use of polluting vehicles and providing an additional incentive for people to switch to cleaner vehicles.

In October, the Tony Blair Institute said Chancellor Rachel Reeves should introduce a simple road pricing system of 1p a mile for cars and vans, and 2.5p to 4p for lorries and heavy goods vehicles.

What do you think about the idea of a pay-per-mile road tax? Would it be a fair way to fund road maintenance, or is it an unnecessary burden on drivers? Share your thoughts in the comments section.