New car tax changes that could be introduced at the autumn Budget may come with three major issues, according to a leading expert. Pay-per-mile is back on the cards after campaigners at the Resolution Foundation called for the introduction of a 9p per mile fee on electric vehicles.
Iain Reid, head of editorial at Carwow stressed that a pay-per-mile charge could be a “fairer” and “more transparent” system of charging road users. But, he admitted three major issues could derail the system, including concerns around privacy and worries for rural drivers. He also pointed out that detailing how administration of pay-per-mile fees could be issued “smoothly” was crucial before a system was installed.
Speaking to Express.co.uk, Mr Reid said: “Some believe a fairer, more transparent approach would be to move toward a pay-per-mile system. That way, everyone pays in proportion to their actual road use, rather than being taxed simply for owning or fuelling a car.
“Occasional drivers pay less, heavy users pay more – some argue it’s more equitable and harder to hide behind inflation adjustments.”
“However, switching to alternative methods such as pay-per-mile would involve many considerations – robust privacy protections, smooth administration, safeguards for rural drivers and essential workers.
The Treasury has not revealed whether pay-per-mile could be on the table at the Autumn Budget. Reacting to the Resolution Foundation report, the Treasury has admitted the Chancellor keeps all taxes under review and makes tax decisions at fiscal events.
The Treasury told Express.co.uk that they do not comment on speculation about tax changes.
The Resolution Foundation outlined its proposal in its latest ‘Call of Duties’ report, explaining that fees would be applied on a sliding scale. They suggested light electric vehicles weighing around 1,000kg could be charged around 3p per mile to use the roads.
This would increase to 6p per mile for EVs weighing 1,800kg and then up to 9p per litre for heavier models around 2,800kg. Although, Iain stressed the system had some potential and may soon replace fuel duty and traditional Vehicle Excise Duty (VED).
He added: “Done correctly, it could replace the constant upward creep of fuel duty and VED with something fairer given it’s directly linked to usage.”
Chancellor Rachel Reeves will announce the autumn Budget on November 26.
