Car tax pay per mile scheme would work ‘extremely well’ for vehicle leasing contracts

Martin Lewis gives money-saving advice on VED car tax

Leasing experts have predicted any updates on the system would be “very easy” to adopt and help move motorists towards one payment that covers all their needs. All car lease contracts already come with a mileage allowance so this could be adopted to include the new updates with no hassle for drivers.

John Wilmot, CEO of LeaseLoco says many firms already add on road tax charges onto the driver’s monthly contract.

This is because the finance company remains the registered owner of a vehicle during a lease contract.

It means that they are still responsible for paying the car tax and not the driver who has decided to lease the vehicle.

It is that this system would change if any updates were made to how road tax was calculated in the future.

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Speaking exclusively to Express.co.uk, he said: “Currently leasing contracts include the cost of road tax (VED) and any new price per mile scheme would lend itself extremely well to leasing.

“[Leasing] is already the fastest growing sector of new car sales in the UK.

“With all contracts having a mileage allowance, it would be very easy to continue to include this new charge cost in the contract.

“Allowing consumers to move ever closer to one monthly payment that covers all of their car costs.”

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The new car tax proposals are being considered to fill up to a £40billion hole in public spending due to the switch to electric cars.

The government would be expected to lose money from fuel duty income and vehicle excise duty as more motorists switched to electric vehicles.

There has been no official word on whether electric cars will continue to be exempt from charges but this extra financial help is expected to eventually be withdrawn.

Mr Wilmot added it was “no surprise” proposals were being drawn up to plug a gap in public spending.

However, he warned any new scheme needs to be “carefully considered” to ensure drivers are not impacted negatively by the changes.

The proposals are yet to be officially agreed with any plans not set to be implemented immediately.

He told Express.co.uk: “With fuel duty being worth £28billion per year in recent years to the government, and the recent announcement bringing forward the banning of petrol and diesel new car sales to 2030, it’s no surprise that the government are making steps to try and plug this gap.

“The details are yet to be seen but it’s clear that any plan needs to be carefully considered to ensure there is no financial net negative impact on motorists.”

The Department for Transport said it is important to ensure revenue from motoring taxes keep pace with changes on the road.

This is vital to ensure first-class public services and infrastructure can continue to be funded.

They added that changes to the tax system will be considered by Chancellor Rishi Sunak before any decisions will be announced.

Any changes or further steps will be announced by the DfT in due course. 

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