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The Government has dismissed reports of an imminent announcement on a pay-per-mile road pricing scheme, allaying driver and industry concerns.

A definitive statement issued by the Department for Transport over fears that a pay-per-mile car tax could be introduced makes the government’s position very clear;

“We have no plans to introduce road pricing. We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”

While some forms of road pricing schemes do exist in the UK, such as toll roads, charges to enter bridges and tunnels, and zonal charging schemes in low-emission areas, where drivers pay a fee to enter a specific area with a particular vehicle, there have been ongoing discussions about the merit of the broader use of road pricing on public roads. In its short statement, the Department for Transport has quashed such thinking.

While the specifics of a road pricing scheme have never been clarified, it had been suggested that such a scheme could have seen the current Vehicle Excise Duty (road fund licence) and fuel duty revenues rolled into one pay-as-you-drive fee. In essence, the people who used the road the most would pay the most, while a government paper from 2022 suggested that, in principle, road pricing would have two purposes:

Managing the costs of motoring, such as pollution, emissions and congestion.

The increasing number of EVs on UK roads will continue to see the value of tax revenues raised through the sale of petrol and diesel decline. The Office for Budget Responsibility (OBR) previously reported that the complete transition of all UK vehicles to battery power would “result in a revenue loss of 1.5 per cent of GDP (equivalent to £31 billion [€35.8] in today’s terms)”.

While battery electric vehicles will start to pay Vehicle Excise Duty starting in April of next year, this will not bridge the tax gap filled historically by petrol and diesel sales. Therefore, while not road pricing, other motorist tax-raising approaches may still need to emerge.

Take a look as we explore the latest developments of pay-per-mile road pricing.

The Government rules out pay-per-mile road pricing

The price of filling a car’s tank with fuel has started to fall from what have been eye-watering highs, while electricity prices are set to rise in October. A cost comparison between a battery electric vehicle (BEV) and a petrol equivalent seems useful for potential car buyers.

The prices of unleaded petrol and diesel at UK forecourts have been falling more quickly than at any other point in 2024, as RAC Fuel Watch analysis revealed on 23rd September.

As of 19th September, a litre of unleaded was being sold for 136.15p on average – down 5p since the start of September (141.26p) and almost 7p lower than a month previously (142.86p).

A recent What Car? Real-world assessment of BEV ranges provides a helpful guide to assessing BEV efficiencies and costs.

A home charger will see a BEV charged at 22.4p per kWh (the current electricity price cap) for anyone on a standard tariff. However, special overnight tariffs can be far cheaper; Octopus offers a rate of only 7p/kWh, although slightly higher than standard daytime charging can offset some of this gain.

According to What Car, drivers charging a Tesla Model 3 RWD exclusively at home, paying 22.4p per kWh, would spend roughly £508 on electricity every 10,000 miles. If all the charging was at a public supercharger, which can rise to 79p per kWh, the cost rockets to £1795. However, for anyone accessing the overnight 7p per charging rate, the cost would plummet to £167.

Based on a petrol-powered BMW 320i, which is a close premium equivalent to a Tesla Model 3. The BMW has a claimed 42.80 MPG, using Fleet News’ Car Cost Calculator, 10,000 miles at the prevailing average of £136.15 per litre petrol costs would see 10,000 miles cost £1439.43. Use motorway service stations, and this jumps to £1701.52

The average annual mileage in the UK is 7,567 miles, according to the Department for Transport website.

Based on an analysis of MOT test data, over half of the vehicles in Great Britain travel less than 100 miles per week, with under 5% of cars driven over 15,000 miles per year by car, or 41 miles per day.

Based upon this car usage insight, the average UK motorist will have minimal reason to use a motorway service station for petrol or diesel. A BEV driver, provided they have a home charger, and since most of today’s BEVs have a range exceeding 200 miles, should be able to complete most of their charging requirements at home. Whether opting for a dedicated overnight tariff is worth the higher daily tariff would be an individual decision. For this reason, we have not included it in the final result, but it will be very viable for some.

A Tesla Model 3 RWD exclusively at home paying 22.4p per kWh would spend roughly £508 on electricity every 10,000 miles. (This will rise a little in October when the cost cap increases)

The BMW 320i, travelling 10,000 miles at the prevailing average of £136.15 per litre petrol costs, would see 10,000 miles cost £1439.43.

Indeed, there are plenty of caveats to this, and individual drivers must assess their driving usage and access to a home charger, but having used recognised third-party data sources, the potential difference, based just on ‘fuel’, is significant.

With running costs being a key factor for many consumers, take a look as we dive into BEV v petrol. 

Car running costs: battery electric v petrol

Recognising excellence and championing the incredible work of women across the credit and financial services industry, we’re extremely proud to celebrate our 2024 Women in Credit Awards finalists. We’re committed to driving positive change across the industry and these awards provide a platform to encourage diversity, equity and inclusion even further.

Sharing the importance of empowering and supporting the inspirational work of women and allies, meet some of our very worthy finalists with a few words of inspiration for future women leaders… 



Joanne Elliot, Personal Assistant: Colleague of the Year

“Recognition plays a fundamental role in cultivating an inclusive, empowered environment where employees of all backgrounds can unleash their potential and thrive. My advice to other women would be don’t limit yourself. Many women limit themselves to what they think they can do. You can go as far as your mind lets you. What you believe, you can achieve.”

Emily Birkinshaw, Sales Development Partner: Advocate of the Year

“Initiatives such as this provide an opportunity to not only showcase female talent but to recognise those who continue to drive forward this agenda and lead the way in creating a more diverse and inclusive space for us all to thrive in. They’re a necessary catalyst to keeping this conversation alive and enabling others to be a part of positive change.”

Caroline Hudgell, Senior Business Development Consultant: Team Player of the Year

“I think it’s really important that everyone is on an even playing field. Diversity and Inclusion initiatives are key for creating more focus here. If the opportunities for all are equal, the right people will naturally progress. Don’t be intimated or feel you have anything to prove as a woman. Just to be yourself, and believe in your own abilities.”


Keep an eye on our social channels to see how they get on!

Catch up with our 2024 Women in Credit Awards finalists who have a few words of inspiration for future women leaders.

News - October 2024

The Government rules out pay-per-mile road pricing

Car running costs: battery electric v petrol

Meet our 2024 Women in Credit Award finalists

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