Executive Summary
The Road Use Levy (RUL) is a comprehensive reform of UK road taxation designed to replace the current Vehicle Excise Duty (VED) system for all newly registered vehicles from April 2028, while beginning the long-term transition away from fuel duty as the UK moves towards electric vehicles.
The policy creates a progressive, transparent and future-proof taxation system based on four simple principles: annual mileage, vehicle weight, CO₂ emissions and vehicle performance. Rather than charging motorists for every mile driven, the system uses broad mileage bands that are already familiar through the insurance industry, avoiding intrusive tracking while ensuring that those who make greater use of the road network contribute more.
The Road Use Levy rewards lighter, cleaner and more efficient vehicles, while requiring larger, heavier, more polluting and higher-performance vehicles to make a greater contribution. It provides manufacturers with clear market signals about the types of vehicles the UK wishes to encourage, helping to reduce road danger, traffic noise, air pollution and infrastructure damage.
Alongside the levy, motorway tolling would provide a dedicated funding stream for maintaining and improving Britain’s ageing road infrastructure, including bridges, tunnels and motorways, creating a direct link between the cost of motoring and the quality of the road network.
The Problem
The UK’s road taxation system is becoming unsustainable.
Fuel duty has historically generated tens of billions of pounds each year. However, as electric vehicle adoption increases, this revenue will continue to decline.
At the same time:
- Vehicle Excise Duty no longer reflects actual road use.
- Modern vehicles are becoming significantly heavier.
- Large SUVs and performance vehicles create greater road wear and increased collision severity.
- The UK has an ageing motorway network requiring long-term investment.
- Current proposals for per-mile charging risk creating an intrusive, bureaucratic and unpopular taxation system.
The Government’s proposed electric Vehicle Excise Duty (eVED) focuses primarily on electric vehicles and introduces per-mile charging. This risks discouraging EV adoption, particularly amongst high-mileage users and those living in rural and semi-urban communities.
The UK needs a road taxation system that is simple, fair, future-proof and applies equally to all vehicles.
The Policy
The Road Use Levy replaces Vehicle Excise Duty for all newly registered vehicles from April 2028.
The levy is collected alongside vehicle insurance using existing insurance declarations and DVLA vehicle information.
Every vehicle is charged using a simple formula based upon:
- Annual mileage band
- Standard vehicle weight class
- CO₂ emissions
- Vehicle performance
In addition:
- Motorways become toll roads using ANPR technology.
- Foreign vehicles contribute fairly.
- The system integrates with the existing HGV Road User Levy.
- Revenue is ring-fenced for road infrastructure.
Objectives
The Road Use Levy aims to:
- Replace Vehicle Excise Duty with a modern taxation system.
- Begin replacing declining fuel duty revenues.
- Apply equally across petrol, diesel, hybrid and electric vehicles.
- Encourage lighter and more efficient vehicles.
- Improve road safety.
- Reduce traffic noise.
- Improve local air quality.
- Provide long-term funding for roads, bridges and tunnels.
- Avoid intrusive tracking technology.
- Minimise bureaucracy.
- Create predictable government revenues.
- Provide manufacturers with clear design incentives.
Policy Details
Base Rate
The illustrative base Road Use Levy is £280 per year.
This consists of:
- Current standard VED (£195)
- Approximately £80 representing 8,000 miles at 1p per mile
- Rounded to £280 for administrative simplicity.
Mileage Bands
Drivers estimate annual mileage when purchasing insurance.
- Up to 8,000 miles — ×1
- 8,001–16,000 miles — ×2
- 16,001–32,000 miles — ×3
- Over 32,000 miles — ×4
Using broad mileage bands keeps the system simple while avoiding the need to report every mile driven.
Standard Weight Classes
Every vehicle type has a standard weight class.
Classes include:
- Motorcycles
- Cars
- Vans
- Trucks
- HGV tractor units
The levy increases by 0.5× for every 100kg above the standard weight for that vehicle class.
Commercial vehicles are treated favourably by using vehicle class baselines rather than laden weight, ensuring businesses are not penalised simply for carrying goods.
CO₂ Multiplier
Vehicles receive a multiplier based upon emissions.
Zero-emission vehicles start at 1.0, with a small increase for every additional 10g/km of CO₂ emitted.
Performance Multiplier
Vehicles producing over 250 horsepower receive an additional multiplier to reflect increased collision risk associated with high-performance vehicles.
VAT Bands
Vehicles are also placed into three VAT bands.
Band A
- Zero-emission
- Under 1.5 tonnes
- Minimum 5 miles/kWh urban efficiency
Band B
The majority of vehicles sold in the UK.
Band C
Vehicles that are:
- Over 3 tonnes
- Extremely inefficient
- Very high CO₂ emitters
This acts as a market guardrail to discourage excessively heavy vehicles.
Motorway Tolling
Motorways move to a modern tolling system using ANPR technology.
Features include:
- Automatic payment accounts
- Auto top-ups
- Local resident exemptions
- Daily and annual caps
- Foreign vehicle charging
- Ring-fenced infrastructure funding
Residents living near motorways automatically receive local discounts using DVLA address data.
Benefits
The Road Use Levy delivers benefits across multiple policy areas.
Economic
- Stable long-term revenues.
- Predictable infrastructure funding.
- Reduced bureaucracy compared with per-mile charging.
- Fair contributions from foreign vehicles.
Environmental
- Encourages lighter vehicles.
- Supports zero-emission transport.
- Discourages inefficient vehicle design.
Public Health
The policy helps improve public health by encouraging:
- Smaller vehicles.
- Reduced collision severity.
- Lower traffic noise.
- Improved local air quality.
- Reduced particulate emissions.
Industrial
Manufacturers receive clear signals that the UK wishes to encourage:
- Efficient EVs.
- Lightweight vehicles.
- Electric vans.
- Electric HGVs.
- Future electric agricultural machinery.
Implementation
The Road Use Levy would be introduced from April 2028 for all newly registered vehicles.
Collection
When insurance is purchased:
- Driver selects mileage band.
- Vehicle registration identifies vehicle specifications.
- The levy is calculated automatically.
- Payment is made through either the insurer or DVLA.
- Insurance only becomes valid once the levy has been paid.
Compliance
Compliance uses existing systems.
Mileage is verified through:
- Annual MOT records.
- Vehicle servicing records (where appropriate).
- Existing insurance fraud legislation.
No GPS tracking or telematics are required.
Frequently Asked Questions
Why not simply charge by the mile?
Per-mile charging is intrusive, bureaucratic and difficult to enforce. Mileage bands provide almost the same outcome while protecting privacy and simplifying administration.
Does this discourage EVs?
No.
Unlike eVED proposals that specifically target EVs, the Road Use Levy applies to all new vehicles, regardless of fuel type.
Why charge heavier vehicles more?
Heavier vehicles generally:
- Cause greater road wear.
- Increase collision severity.
- Generate more tyre and brake particulate pollution.
- Consume more energy.
How does this affect commercial vehicles?
Commercial vehicles use separate weight classes recognising their importance to the UK economy.
A local tradesperson using an electric van may remain within the lowest mileage band, while high-mileage national logistics operators contribute proportionately more.
How are foreign vehicles charged?
Motorway tolls use ANPR technology similar to the Dart Charge system, ensuring overseas vehicles contribute fairly.
Criticisms
“This is another tax on motorists.”
The proposal replaces Vehicle Excise Duty and creates a sustainable replacement for declining fuel duty revenues rather than introducing an entirely new taxation system.
“Weight multipliers unfairly penalise EVs.”
Weight directly influences road wear, collision severity and particulate emissions. The policy therefore encourages manufacturers to produce lighter and more efficient electric vehicles.
“Commercial operators will pay too much.”
Commercial vehicles receive favourable weight classifications, recognising their importance to the UK economy. The levy scales according to vehicle type rather than cargo weight.
“Why not use per-mile charging?”
Per-mile charging creates uncertainty, bureaucracy and privacy concerns. It also produces less predictable government revenue because motorists may alter driving behaviour to reduce tax liability.
Broad mileage bands are simpler, more predictable and already familiar through the insurance market.
“Won’t manufacturers simply ignore the signals?”
The combined Road Use Levy and VAT bands create strong long-term financial incentives to develop lighter, safer and more efficient vehicles for the UK market.
References
- UK Vehicle Excise Duty legislation and guidance.
- UK Government consultation on Electric Vehicle Excise Duty (eVED).
- Department for Transport vehicle registration statistics.
- Driver and Vehicle Licensing Agency (DVLA) vehicle specification data.
- Existing HGV Road User Levy framework.
- Research on vehicle weight and collision severity.
- Research on transport noise and public health.
- World Health Organization guidance on environmental noise.
- UK Air Quality Expert Group publications on particulate matter.
- National Highways infrastructure investment and maintenance publications.