Campaign for Better Transport has warned that without reform of vehicle taxation, the Treasury will face a potential £5bn a year tax loss by 2030. 

In 2023-24, drivers paid £24.83bn in fuel duty charged at 52.95p per litre which was then liable for 20% VAT. But revenue from fuel duty is already on a downward spiral, and has fallen more than 10% in the last five years, from £27.5bn pre-pandemic in 2019-20.

In addition, vehicle excise duty or road tax raised an additional £8bn last tax year.

This means tax drivers paid a mighty £32.8bn in total road related taxes last year, but the government only spent a third of this revenue on road construction and maintenance.

With the UK transitioning away from petrol and diesel vehicles towards electric vehicles, the campaign group proposes ‘a simple charge levied on zero emission vehicles (ZEVs) on a per-mile basis’.

I