New pay-per-mile car tax bands could be introduced for 'one type' of vehicle

The Chancellor has been urged to introduce a pay-per-mile car tax system and bands on one type of vehicle - but the new Labour Party government has already ruled out a widespread scheme

Chancellor Rachel Reeves is facing pressures to implement a pay-per-mile car tax featuring different rates for various vehicles. Though the new Labour government dismissed the notion of a widespread pay-per-mile system in the Autumn Budget, there is a push for electric vehicle (EV) owners to be charged.

Calls have been made for Ms Reeves to introduce a pay-per-mile tax on EV drivers, a measure estimated to generate £815 million as the Labour administration seeks to address a £20 billion deficit. Campaigners are advocating for an about-face regarding the adoption of a pay-per-mile car tax system on UK thoroughfares by this October.

The Campaign for Better Transport (CBT) has encouraged Ms Reeves to declare a fresh road pricing strategy in the forthcoming Autumn Budget. Their report suggests: "We calculate a 2p per kilometre charge (based on distance only therefore not requiring vehicle tracking) would raise £815million in the first year, but revenue will grow as ZEV update increases. It is also low enough to maintain the incentive to switch to EVs, and it can be coupled with exemptions for existing ZEV owners or caps for certain categories of vehicles such as for fleets or people in rural areas."

The CBT stated: "Introducing distance-based taxation for ZEVs would ensure that the transition to cleaner vehicles does not undermine public finances."

They further added: "We are calling on the Treasury to announce in the Budget the introduction of a simple pay-per-mile tax on ZEVs in lieu of fuel duty, while allowing for a sufficient transition period for drivers and businesses to prepare.", reports Birmingham Live.

However, the Treasury has recently dismissed the idea of introducing a pay-per-mile charge this October. A Government spokesperson told Birmingham Live last month: "We have no plans to introduce road pricing."

"We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets."