Pay-per-mile charging plans raise unresolved questions for taxis, LTDA warns
- Perry Richardson
- 3 minutes ago
- 3 min read
The Government’s emerging pay-per-mile road-pricing proposals are intended to replace declining fuel duty revenues as the UK transitions to electric vehicles, but key details remain unresolved for the taxi sector, according to the Licensed Taxi Drivers’ Association (LTDA).
Under the plans outlined alongside the 2025 Budget, drivers of electric vehicles would be charged based on distance travelled rather than fuel consumed. Ministers have framed the policy as a long-term reform rather than an immediate tax rise, with a formal consultation still to be launched. No exemptions or sector-specific arrangements have yet been confirmed.
For taxis, this lack of clarity is already raising concerns. Paul Brennan, Chairman of the LTDA, said there was currently no indication that licensed taxis would be exempt from the proposed EV mileage charge. He said the association would respond formally to the consultation once published, setting out the case for exemption and highlighting operational issues unique to the taxi trade.
A central concern is vehicle ownership and usage. In London, the majority of black cabs are rented rather than owner-driven, with a single vehicle often used by multiple licensed drivers across different shifts. Vehicles may also be driven by mechanics, proprietors or fleet staff for maintenance and testing. Brennan said it was unclear how liability for mileage charges would be apportioned between different users of the same vehicle.
Government proposals to replace fuel duty with road-pricing remain at consultation stage, with taxi trade bodies flagging major practical and operational gaps.
The Government’s current thinking appears to rely on annual MOT mileage readings as the basis for calculating charges. The LTDA has described this approach as flawed for high-mileage, commercially operated vehicles. Taxis typically cover far greater distances than private cars, and the annual snapshot provided by an MOT test would not reflect who was driving the vehicle at different points during the year.
Brennan also raised concerns about administrative dependency on fleet owners and rental firms. Under a mileage-based charging system, individual drivers could be reliant on third-party record-keeping to ensure charges are allocated correctly. He warned that inconsistent paperwork and reporting standards across fleet operators could leave drivers exposed to disputes or incorrect bills.
The pay-per-mile concept has been discussed by successive governments as a potential replacement for fuel duty, which is expected to decline sharply as EV uptake increases. Treasury modelling has long identified road pricing as a way to maintain transport tax revenues while supporting decarbonisation goals, but ministers have so far avoided firm commitments on timing or structure.
Industry bodies are expected to argue that taxis already face a complex mix of regulatory costs, including licensing fees, accessibility requirements and environmental standards, and that any new charging regime must reflect their role as part of the public transport network rather than treating them as private motorists.
Brennan said in TAXI Newspaper: “There’s no taxi exemption mentioned as yet for this pay-per-mile EV fee the 2025 Budget sought to introduce, with a consultation still to be done.
“We will of course respond and include the obvious reasons why we should be exempt, as well as make clear some practicalities, like the fact that the majority of London taxis are now rented and could be used by several drivers, as well as mechanics, proprietors, etc, so how will each driver be liable?
“Yearly MOT checks appear to be the Government's current flawed thinking on how mileage will be recorded and charged. We could be at the mercy of the fleet owner's efficient paperwork and we know some are not so good at that.”
