The Treasury has confirmed that the new pay-per-mile car tax system, championed by Chancellor Rachel Reeves, will apply to UK-registered vehicles when they are driven abroad. This means motorists will face additional charges on top of the fuel duty already paid in foreign countries, effectively extending the UK's tax reach across borders.
How the System Works
The pay-per-mile scheme was introduced to replace declining fuel duty revenue as drivers switch to electric vehicles. Under the current system, UK motorists pay fuel duty at the pump, which funds road maintenance and other transport costs. However, when driving abroad, they pay fuel duty to the country they are in, not the UK. The new mileage fee ensures the Treasury collects revenue even when vehicles are outside the country.
According to official figures, a litre of fuel covers approximately 14 miles, equating to a fuel duty cost of about 3.78p per mile. The pay-per-mile fee is set at a similar rate, meaning drivers will pay roughly the same amount per mile as they would have in fuel duty at home. However, when abroad, this fee is added on top of foreign fuel duty, which can vary significantly.
Impact on Holiday Costs
For UK motorists taking road trips in Europe, the new charge could substantially increase travel expenses. In countries like Germany and France, fuel duty is higher than in the UK, so the additional mileage fee may have less impact. But in nations with lower fuel duty, the combined cost could be significant. For example, Austria charges just €0.48 per litre (around 41p), compared to the UK's 52.95p. Hungary's fuel duty is equivalent to 33p per litre, Spain's is about 40p, and Czechia's is roughly 44p.
Electric vehicle drivers are not exempt. From 2028, they will be charged 3p per mile, on top of any EV charging costs and toll road fees. This makes European road trips more expensive for all UK motorists.
Privacy Concerns and Practical Challenges
The system calculates fees based on annual odometer readings, as officials claim it cannot track where vehicles are driven to protect privacy. However, this means drivers cannot avoid the charge by proving they were abroad. Potential workarounds, such as installing tracking devices that deactivate when leaving the UK or obtaining border officials' signed mileage statements, are deemed impractical and likely to cause delays. Critics argue the system is messy, confusing, and may lead to disputes.
Luke Chillingsworth, Cars Reporter for Express, described the policy as "another stunning blow to road users," adding that it ensures the Chancellor "gets her hands on cash that doesn't really belong to her."
Conclusion
The pay-per-mile tax on UK motorists abroad is set to increase the cost of holidays and business travel. With no straightforward solution to avoid the charge, many are calling for the system to be scrapped before it comes into force.
