Pay-Per-Mile 'Tax' Explained
Pay-per-mile is something that has been flying around for a while, with rumours circulating that it will soon be introduced and replace the current 'road tax' model. Its official name is Road Pricing. Road users are concerned that it will see the costs associated with owning a car skyrocket. In a time when the cost of everything is going up, it is understandable that people want to understand more about pay-per-mile. Currently, there are no definitive plans from Government on a national or local level to see this introduced. That being said, some in Government are strong advocates for it and keen to see it introduced, such as Mayor of London Sadiq Khan.
The current system sees drivers pay a fixed annual amount known as Vehicle Excise Duty, otherwise known as 'road tax'. This is calculated based on the amount of emissions the vehicle produces. On top of this, drivers are taxed for fuel duty every time they fill up their car.
What is Pay-Per-Mile?
This proposed system what see drivers pay for the number of miles they driver, rather than the fixed annual amount. As with the current model being dependant on vehicle emissions, the proposal suggests one way of calculating the amount paid per mile will also vary. Factors such as vehicle type and emissions produced could impact the amount paid per mile. The proposal came about following a significant decrease in the tax being generated from road users as more drivers switched to electric vehicles to benefit from low or no VED.
How much it will actually cost per mile is subject to much speculation. Again, nothing definitive has been put forward. Some claim that it should be in the region of 4p per mile, although some rumours have circulated with ridiculous costs of up to 15p per mile. Ministers have claimed that drivers would not actually be worse off when comparing it to the current method. This is because the rates would be different for each person and would be calculated based on how green your car is and how many miles you travel.
On top of this, those behind the proposal have said it will discourage people from using their cars for unnecessary journeys, aiding in reducing both CO2 emissions and congestion.
When Could it Be Introduced?
In a recent Government statement, they have confirmed that they have no plans to introduce pay-per-mile this Autumn. We are all used to Government making U-Turns on their decisions, but at the moment this is all we have to go on.
A Government spokesperson has said in the last day or so: "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".
In Summary
- It has been confirmed that there are no immediate plans to introduce the pay-per-mile system
- If introduced, it would replace the current VED method of taxation
- The cost would be calculated based on the emissions the vehicle produces and the miles driven
- In theory, the costs should not be greater than they currently are
