Road user charging to replace fuel duty

What is the the current road use charge based on fuel duty?
Our analysis indicates the current rates of road use charge based on fuel duty and VAT thereon for four broad categories of vehicles (light cars, medium cars/MPVs, SUVs and 4x4s are around:
Vehicle type
Pence/mile
Light car
7.03
Medium car/MPV
7.90
SUV
9.03
4x4
10.54

How many vehicles on UK roads
Vehicle type
Numbers
Light car
20.95 bn
Medium car/MPV
5,67 bn
SUV
1.13 bn
4x4
1.75 bn
Plus lorries, buses, utility & emergency vehicles and other types. FBHVC research indicates there are 1.3m "Historic" vehicles (over 30 years old on a "rolling basis") which are eligible for VED exemption.

How much fuel duty & VAT is paid in
the UK in a typical year?

Av fuel consumption mpg
Fuel duty & VAT paid pa
£
25
1,581
30
1,317
40
1,129
45
988
50
878
Based on driving 12,500 miles pa and petrol retailing at £1.49/litre. An MGV8 covering say 2,500 miles pa and averaging 30mpg would pay around £316 of fuel duty and VAT.

What are your views on the future of road-use charges?
Do send your views and any ideas on how to set the charges and collect them to the V8 Webmaster or post them on the tread on the V8 Bulletin Board.
V8 Webmaster


See our full article

Posted: 211221
If the UK Government decides to introduce a system of road user charging to replace fuel duty as more and more cars become electric, then it should be as simple as possible in both design and application. With the UK Government ban on the sale of new petrol and diesel cars from 2030 and with hundreds of thousands of electric vehicles already on the road, income from fuel duty will steadily decline and the question for any Chancellor of the Exchequer is how will he make up the lost fuel duty revenue? The shift to electric cars is estimated to bring a drop of £5 billion a year in fuel duty by 2031 - a large hole in any budget for a Chancellor. The recent annual tax take from fuel duty from petrol and diesel sales for cars and other vehicles has been around £37 billon a year!
With the continuing fall in fuel duty income the Chancellor will have to look for an alternative - some form of road user tax. As we have had a fuel duty levy on UK motoring for many years and have all got used to it, it's likely any Chancellor will conclude it will be continued in some form.

What options are there?
There are basically two approaches to introducing an alternative form of road use charging:

At one extreme - a complicated scheme of road use charges based on time, distance travelled and location of the vehicle. The view of the RAC Foundation has been any time and/or place charges should be decided locally so, for example, if there is to be a congestion charge it would make more sense for that to be a locally designed and managed measure. Those measures could include congestion charges or peak travel charges. The RAC Foundation spokesperson does not think the citizens of London or Greater Manchester or wherever would be that happy if it was somebody in the Department for Transport deciding what it should cost for them to do their local driving!

At its simplest - the road use charge would be based on the distance travelled, which is similar to our paying fuel duty now when we are really paying for the number of miles we drive. Many will say "go with the simplest scheme you possibly can, don't over complicate it."

Charge based on the distance travelled for all
Motorists who drive electric cars should be prepared for the introduction of charges based on the distance they cover each year. A "distance charge" would be less controversial than road pricing because it can be levied by checking the annual mileage figure during an MOT test or from an on-board computer without the state prying into motorists' whereabouts.

But a distance travelled charge would not necessarily distinguish between rural or semi-rural roads and congested urban or major roads close to urban areas (like sections of the M42) and could place a burden on drivers in remote rural areas with lengthy trips to their nearest commercial, workplace or retail destinations in the nearest towns.

Charge rate
The likely charge rate would be a single per-mile charge for each category of vehicle. The charge rate would depend on a vehicle's weight (hence taking into account the damage it does to the road) and its tailpipe emissions. The lighter

and cleaner a vehicle is, the lower the per mile charge. The heavier and dirtier the vehicle is, the higher the per mile charge.

Tax collection costs
One key concern with any tax system is the cost of collecting the tax and the consequent effect on the amount of tax collected net of the collection costs. With fuel duty it's payable as you pay for each litre of fuel when filling your fuel tank and it is collected for the Treasury by the fuel retailers. In an earlier comment from the RAC Foundation in 2017 they envisaged a per-mile charge, adjusted for the weight of the vehicle, but collected via insurance companies, presumably during the term of the current insurance cover or on renewal when the policyholder is disclosing the mileometer reading on their vehicle. The reliability and the tamper proof protection built into the devices on vehicles recording annual mileages would be important as an almost certain unintended consequence would be criminals devising ways of circumventing the accurate recording of mileages to avoid road use charges.