Pay As You Drive Tax Scheme Mooted

Mon 16th Nov 2020

As electric car sales rise and the prospect of fuel tax revenues slips, the UK government is looking at some controversial schemes to recoup funds.

One of those proposals would see British drivers taxed based on the amount of miles driven in their vehicle, that’s according to an article in The Times, which suggests that Chancellor Rishi Sunak would introduce charges for mileage to cover the anticipated £40 billion tax shortfall.

In a move to encourage more drivers to make the switch to greener fuel choices, electric vehicles are currently exempt from paying road tax, an incentive which has helped drive record sales in 2020. And with the Government announcing this week that it is bringing the ‘road to zero’ forward to 2030, by banning internal combustion cars, fuel duty could soon be a thing of the past.

“As more electric vehicles come on to our roads, revenue from fuel duty will decline so it’s inevitable a new system will have to be developed,” said Nicholas Lyes, head of roads policy at the RAC.

“While not paying car tax is clearly an incentive to go fully electric at the moment, we will very soon need a system that can levy tax on both conventionally fuelled and battery electric vehicles fairly.”