The “bill” could reach more than €1,300 per year – Executive Summary

UK drivers could face a new tax that could be introduced in the UK state budget in October: With Prime Minister Keir Starmer warning that the next few months will be “painful” for many Britons, many analysts are predicting that road tax could change to a pay-per-mile system.

“The proposed pay-per-mile tax system raises questions about the fairness of the scheme, particularly for those who need to drive safely,” said Tom Banks, car insurance expert at price comparison service Go.Compare. “It is a common practice for a number of reasons. Our research shows that drivers are concerned about what it means for these road users,” he said, quoted by the Daily Express.

“While a pay-per-mile approach may discourage unnecessary vehicle use, it will be very important to consider those who need to drive to ensure they are not penalized for something beyond their control,” he said.

The current vehicle tax (VED) system charges drivers based on the size of a car's engine or the amount of CO2 it produces: the new pay-per-mile system will charge drivers for the number of kilometres driven [uma milha equivale a 1,61 quilómetros].

For supporters of the tax, it will make life fairer for electric car owners, who will have to pay road tax for the first time in 2025. For critics, it's just another way to make money off drivers, making them think twice before using the car for some trips.

At the moment, it is not yet certain whether the government will introduce this per-mile tax system or what rate drivers will be charged: however, there are suggestions that it will be set at 15 cents per mile. Currently, the UK Vehicle Excise (VED) rate is set at £190 (€227) per year for petrol and diesel owners, regardless of how much they use the roads.

With the average UK driver travelling 11,990 kilometres a year, this charge means drivers will have to pay a staggering £1,100 a year (around €1,316) in road tax unless the government puts some sort of cap on the total amount due – compared to under the current road tax system, this would be roughly the same rate as a car producing between 171 and 190g/km of CO2, such as an Audi A6 or Jaguar XF Sportbrake.

According to a British study, drivers who travel less than 3,166 miles per year (about 5,100 km) could save VED tax – however, this estimate does not take into account fuel tax, which could also be incorporated into any new pay per mile rate.