Older drivers have been warned that they could face a sharp increase in their motoring bills if a change is made in the upcoming October Budget.
With Prime Minister Sir Keir Starmer warning Brits that some measures in the budget will be ‘painful’, some are predicting a pay-per-mile tax system will be adopted.
The current system of road tax, which is officially known as vehicle excise duty (VED), initially charges drivers a figure based on the amount of carbon dioxide their car makes before issuing a flat rate of £190 from the second year onwards.
First introduced in April 2017, and applicable to most vehicles first registered afterwards, VED currently does not include zero-emission models, such as electric cars.
However, with EV owners set to pay road tax for the first time in April 2025, some have argued that a move to a new system would make it fairer for drivers who have moved away from petrol or diesel models.
Under a pay-per-mile tax system, drivers would be charged a unique figure that is based on the distance they have travelled in their vehicle over a year.
As a result, those who spend more time behind the wheel will be charged more than other motorists who use their car sparingly.
Supporters of a pay-per-mile tax system claim that it could encourage more motorists to use alternative forms of transport for short journeys. However, those who are not in favour argue that it would penalise elderly and rural motorists who depend on their car.
Since the Government has yet to confirm whether a pay-per-mile tax system will be introduced yet, it is difficult to assess how much motorists will need to pay.
However, some motoring experts have predicted that the figure could be as high as 15p for each mile driven.
According to the vehicle leasing firm Leaseloco, drivers over the age of 65 typically travel 7,600 miles per year. As a result, if a 15p per mile tax was introduced, the average older motorist would need to pay £749 per year.
That would mean those born after 1959 would be forking out £749 a year on average for their typical mileage unless a cap was introduced as part of the hypothetical scheme.
Majid Ismailzada, Marketing Director for the rent-to-own vehicle company G&M Direct Hire warned that, if the system is not managed correctly, pay-per-mile tax could make many drivers too scared to make long-distance trips to see loved ones or go on holiday.
He explained: “It’s clear that many families are concerned about the impact of this new tax.
“With the cost of fuel and other expenses rising, the added burden of a pay-per-mile tax could make long-distance travel over the holidays less appealing for many.”
