Pay-per-mile taxes risk having ‘serious implications’ for drivers who could be forced off the road

It comes after prices for car insurance continue to climb with new drivers who now pay on average £3,000 to drive in the UK.

Young drivers have been hit worst by price hikes which have been steadily rising due to inflation and high theft numbers of vehicles in the past few years.

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Aidan Rushby, founder and CEO of Carmoola, said that nearly a third (29 per cent) of Britonsreport that they have reduced their driving in 2024.

Almost a third of 17 to 24-year-olds and a quarter of 35 to 44-year-olds indicate that they are under financial pressure to sell their cars.

He said: “The news this weekend about the introduction of a pay-per-mile road tax could exacerbate this trend driving more motorists off the road.

“It’s clear that Britons are already struggling, and the new initiative, planned to launch in October, will have serious implications, especially for younger drivers and those living in rural areas who rely on their cars for essential activities like work and education.”

The new tax scheme would charge motorists for every mile they drive rather than based on the emissions output of their cars. It would also replace the current Vehicle Excise Duty which taxes more polluting vehicles.

Rushby added: “With limited public transportation options in these regions, such a tax risks pushing more people to the brink, making it even harder for them to maintain the mobility they need.

“It's crucial that any new policy is designed with these challenges in mind to avoid disproportionately impacting those who are most vulnerable.

“It’s a challenging time, and traditionally, costs such as taxes are outside of motorists’ control. However, this new scheme could change that.”

He warned that for drivers set to be impacted by the pay-per-mile road tax, he suggested they find other ways to make car ownership more affordable.

One of them includes shopping around for cheaper insurance and breakdown cover, carpooling or sharing fuel costs.

Drivers could also consider switching to more fuel-efficient vehicles, including hybrids or electric cars, which would help reduce the cost per mile.

The pay-per-mile tax system talks come as the Government looks to recover £9billion in fuel duty revenue which it risks losing as fewer petrol and diesel cars hit the road.

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Global accountancy firm PwC had previously warned that the Government could risk losing billions of pounds in taxes if new measures are not put in place.

Grant Klein, transport leader at PwC, detailed: “There are roughly 40 million licensed vehicles in the UK, which are a huge supporting contributor to the public purse and a shrinking fuel duty tax base will be cause for alarm as the current fiscal position remains stretched.

“It is difficult to imagine the Treasury giving up its substantial current fuel duty revenue without a replacement in mind.”