Understanding pay per mile road tax in the UK

Pay-per-mile road tax, also known as pay-per-mile road pricing, distance-based taxation or mileage-based user fees, is a system of vehicle taxation where drivers are charged based on the actual number of miles they drive rather than paying a fixed annual road tax or fuel duty.

What is pay per mile road tax?

In the UK, a pay-per-mile road tax would mean you only pay for the distance you actually drive, rather than a flat annual fee. It’s being explored as fuel duty income falls with the rise of electric cars. Rates could change depending on your vehicle, emissions, or when and where you travel.

The idea is to make things fairer, keep roads funded, and ease congestion, though UK drivers in rural areas worry it could hit them harder.

Is pay per mile road tax coming to the UK?

In short, the answer is not yet – the UK government has repeatedly stated that it has no current plans to introduce a pay-per-mile road pricing scheme.

That said, the idea is under discussion. Analysts and think tanks argue that it could help to fill the funding gap as more drivers switch to electric vehicles.

How would a pay-per-mile road tax work?

A pay-per-mile road tax would be simple from a UK driver’s perspective: instead of paying a fixed annual fee, you would be charged for the miles you actually drive. Your mileage could be tracked through your car’s odometer, a fitted telematics device, or even a connected app.

The rate per mile might change depending on your vehicle type, emissions, road category, or time of day. This way, occasional drivers pay less, frequent drivers contribute more, and overall road funding remains fair and sustainable.

Labour’s perspective: Rachel Reeves and pay per mile road tax

Rachel Reeves, the UK’s Chancellor, hasn’t officially announced a pay-per-mile road tax, but the Treasury is looking closely at distance-based charging. The big reason? As more of us switch to electric cars that don’t pay fuel duty, the government’s pot for road funding is shrinking fast.

By 2030, the UK could be short by around £7 billion a year in fuel duty. That’s a huge gap to fill, and pay per mile is one of the options being explored to keep roads funded.

But for now, according to AUTODOC experts, nothing is changing. Pay per mile road tax isn’t confirmed in the UK, but Labour is considering it to replace lost fuel duty as more drivers switch to electric cars.

Opposition: Movements to stop pay per mile road tax

Not everyone is on board with the idea of pay per mile road tax. In fact, several well-known campaigns and motoring groups are pushing back hard.

Who’s against it?

• FairFuelUK – one of the strongest voices campaigning against road pricing
• Alliance of British Drivers – fighting mileage-based taxes on behalf of motorists
• Conservative backbench MPs – many see the policy as unfair and unpopular
• AA and RAC – motoring organisations raising serious concerns for drivers

What are the main concerns?

• Privacy worries if GPS is used to track journeys
• Rural drivers being hit harder with no real public transport alternatives
• Added costs at a time of high living expenses
• Essential workers and tradespeople paying more just to do their jobs
• Fears of “double taxation” on top of existing vehicle charges

Petitions and public pushback

This opposition isn’t just talk. Multiple petitions to Parliament have gathered hundreds of thousands of signatures, showing just how strongly many drivers feel about keeping distance-based road taxes off the table.

Calculating costs: Pay per mile road tax calculator

You can estimate your potential costs under a distance-based road tax system by entering your annual mileage and vehicle type.

Quick formula: Your annual miles × pence per mile = estimated cost

Example:

• 7,400 miles/year × 6p per mile = £444 annually

What affects your cost:

• Annual mileage
• Vehicle emissions
• Peak vs off-peak driving
• Road type

Compare to now:

• Current road tax: £180-£600/year
• Fuel duty: £300-£800/year (average)

Note: No official rates confirmed yet – calculators use estimated figures.

Government updates on pay per mile road tax in the UK

Right now, there’s no official announcement or confirmed timeline from the Labour government on pay-per-mile road tax.

Most likely timing

• Autumn Budget or Spring Statement – these are the usual moments for major tax changes to be revealed.
• Before 2030 – with fuel duty revenues set to fall as EV adoption rises, any new system would need to be in place by then.

Where to watch for updates

• Official updates on GOV.UK and from HM Treasury
• Budget announcements made by Rachel Reeves
• Parliamentary debates and public consultations
• Driver updates from AA and RAC

The reality for UK drivers

Because road pricing is so unpopular, any government is likely to hold off making an announcement until it becomes absolutely unavoidable. For now, there’s nothing confirmed, but the debate isn’t going away.

FAQ

Why is the UK considering a pay-per-mile road tax system?

To replace falling fuel duty revenues as more drivers switch to electric cars. The Treasury faces a £7 billion shortfall by 2030 and is seeking fair, sustainable funding.

How would it affect drivers?

You’d pay per mile instead of a flat fee. Light drivers may pay less, while frequent or high-emission drivers could pay more. Concerns include costs for rural UK drivers, privacy, and household budgets.

Is it fair?

Supporters say it’s fairer because you pay for what you use. Critics argue it risks punishing rural drivers, essential workers, and families already under pressure. Labour says any scheme must balance fairness with environmental goals.