Pay-Per-Mile Car Tax Set to Expand to All UK Drivers Including Petrol and Diesel Vehicles
A significant shift in motoring taxation is on the horizon for drivers across the United Kingdom. The newly introduced pay-per-mile car tax system, which was initially targeted at electric vehicles (EVs), is expected to be extended to all drivers, including those operating petrol and diesel vehicles. This expansion is not a temporary measure or a trial but represents a fundamental structural change in how motoring is taxed in the country.
Warning from Motoring Expert
YouTuber Shahzad Sheikh, the founder and presenter of the channel @BrownCarGuy, has issued a stark warning about the impending changes. He emphasized that the pay-per-mile system is designed to replace the traditional fuel duty, which has been a cornerstone of motoring taxation for decades. Sheikh stated, "Pay-per-mile is the replacement for fuel duty. It’s not a temporary measure, it's not a trial, it is a structural shift. Believe you me I think it will expand to everyone else as well soon."
He further explained the economic rationale behind this move, noting that mileage-based taxation is attractive from a Treasury perspective because it is protectable, scales with population growth, and never diminishes. In contrast, fuel duty revenue is declining as vehicles become more fuel-efficient and as drivers increasingly switch to electric or hybrid models.
Government Rationale and Implementation
The Labour Party government, which launched the new pay-per-mile charges, has set the rate at 3p per mile. In a statement, the government outlined the critical role of motoring taxation in funding public services and infrastructure, including road maintenance. The current system relies on two main elements: taxation on vehicle usage, primarily through fuel duty, and taxation on vehicle ownership, via Vehicle Excise Duty (VED).
The government highlighted a growing fairness issue within the existing framework. Drivers of petrol and diesel vehicles contribute to usage taxes through fuel duty at the pump, while electric vehicle drivers do not currently pay an equivalent charge. If this disparity remains unaddressed, by 2030, approximately one in five car drivers would pay no fuel duty equivalent, compared to other drivers who currently contribute an average of £480 annually.
To address this imbalance, the Autumn Budget 2025 announced the introduction of eVED (electric Vehicle Excise Duty) for electric and plug-in hybrid electric cars, effective from April 2028. Under this new system, drivers will estimate and pay for their mileage alongside their existing VED payments. The government asserts that this model minimizes reporting requirements for taxpayers while respecting motorists' privacy, ensuring a fair transition to electric vehicles.
Implications for All Drivers
The expansion of the pay-per-mile tax to all drivers, including those with petrol and diesel vehicles, marks a pivotal moment in UK motoring policy. This move aims to create a more equitable system where all drivers contribute based on both the type of car they drive and how much they use it. The government stresses that all drivers should help cover the costs associated with road wear and tear and the funding needed for major road investments.
As the implementation date approaches, drivers across the UK are advised to stay informed about these changes and prepare for the new taxation structure that will affect everyone on the road, regardless of their vehicle type.
