What could a pay-per-mile car tax mean for you?
September 24, 2025 by Siobhan Doyle
Car changing is a big deal
UK drivers could soon face a new way of paying for road use, as a leading think tank urges the government to introduce a pay-per-mile tax system.
Chancellor Rachel Reeves has been urged to introduce a pay-per-mile car tax system in her Autumn Budget this November 鈥 but what would that mean for you? It could mean paying more tax, although the government insists such a system isn鈥檛 currently planned.
Independent think tank The Resolution Foundation has suggested that Labour鈥檚 next budget should replace the current fuel duty system with a charge based on how far you drive, and, for electric cars, how heavy they are.
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How would the proposed system work?
With electric cars becoming more common, the government is exploring ways to replace fuel duty revenue and maintain our roads. Right now, petrol and diesel cars pay about 6p per mile (plus VAT) in fuel duty, but EVs pay nothing. That鈥檚 leaving a growing gap in road funding.
Resolution Foundation suggests a new way to charge EV drivers: a mileage-based fee that depends on how heavy your car is. This is to help cover the wear and tear on our roads. If you鈥檝e got a lighter EV (around 1,000kg), you鈥檇 pay 3p per mile. Medium EVs (about 1,800kg) would be 6p per mile, and for those heavier EVs (roughly 2,800kg), it would be 9p per mile.
鈥淲eight is a good basis for a tax because it correlates with a range of other things appropriate to public policy, including road damage, noise, pollution from tyres and brakes, danger to others, road footprint, and car value,鈥 the think tank said in its report.
What does this mean for drivers?
If the government were to introduce this system and you drive a petrol car, nothing much would change straight away. As for electric car owners, you may end up paying more.
Even so, EVs would still work out far cheaper to run. On average, you鈥檇 be looking at around 5p per mile for electricity and tax combined, compared with about 16p per mile in a petrol car.
The plan also tries to keep things fair: smaller, lighter EVs would remain very affordable, while drivers of big SUVs or high-end electric models could see their bills climb a bit higher.
But will it happen?
For now, the government insists that there are no plans to introduce road pricing. 鈥淲e are committed to supporting our automotive sector as we transition to electric vehicles to meet our legally binding climate targets,鈥 a HM Treasury spokesperson said.
But with fuel duty revenues falling as more people go electric, experts warn the Treasury will eventually need to find a replacement. Pay-per-mile charging, linked to vehicle weight, is one of the leading options being floated.
Drivers don鈥檛 need to worry about an immediate new tax, but it鈥檚 worth knowing that the debate has begun. If Labour takes up the proposal in future, EVs could lose their tax-free advantage, and heavier models may become significantly more expensive to run.
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*Savings are made up of the maximum dealer discount off RRP 鈥 subject to dealership, location and trim. Prices correct at the time of writing.