Could Car Tax Be Determined via Vehicle Trackers?

A new report from the Transport Select Committee has proposed recommendations on how fuel duty and vehicle excise duty can be replaced, on the basis that all vehicles are fitted with tracking devices.

This could mean that all drivers in the UK could soon have GPS tracking devices installed in their cars in order to enable real-time data to be recorded and transferred into a pricing mechanism, calculating tax based on the individual vehicle’s usage as opposed to just its make, model and year.

The report said:

“If motoring taxation is linked to road usage, the Committee has not seen a viable alternative to a road pricing system based on telematics.”

These new taxation plans signal a move toward the ‘pay-per-mile’ driving that was recently mooted by London Mayor, Sadiq Khan. The Mayor hopes this would encourage more people to use public transport instead of personal cars in order to cut emissions.

The report said that ministers “must examine the role telematics technology can play” in a new road pricing system that will take into account journey times and car sizes.

However, the main concern behind this is the proposal that drivers, as a whole, should not end up paying more than they currently do with the existing tax system.

Will EV Drivers Have to Start Paying Tax?

Yes. Under new plans, MPs have said electric car drivers should have to pay to maintain roads in the same way petrol and diesel drivers do through fuel duty.

This change comes as more and more drivers switch their conventional vehicles out for electric ones before the ban on the sale of new petrol and diesel cars comes into action in 2030, a plan set by the government in order to eradicate the UK’s contribution to climate change and meet their 2050 net zero emissions target.

How Will The Change to Road Tax Affect Fleet Drivers?

The report said that further research would need to be carried out on how this new method for taxation via vehicle trackers would affect heavy road users such as lorry drivers and other fleet vehicles.

“The Government must assess the potential effect of a road pricing mechanism based on telematic technology on high-mileage drivers, such as road hauliers and those in rural communities, and on those least able to adapt to increased motoring costs.”

When Must the Plans Be Approved By?

If these new plans are deemed workable by the Government in the next two months, contract companies will be given the opportunity to develop the technology being put out to tender.

Could The New Taxation Method Also Affect Car Insurance Costs?

There isn’t yet any indication on whether additional vehicle tracking could result in a reduction in car insurance costs.

However, it is worth noting that ‘black box’ car insurance, also known as telematics insurance, is a type of auto insurance that utilises the technology to record a policyholder’s driving data.

This data is analysed for any speeding alerts, drivers that are heavy on the accelerator and brakes and even the time of days during which they drive.

With this information, their insurance premium is based on how safely they behave behind the wheel- after all, insurance companies are more likely to have to pay out for unsafe drivers. The more safely the driver behaves, the less they have to pay in insurance costs.

More recently, a new type of premium has become available from a small number of start-up insurance companies that only charges them when their vehicle is moving. This type of insurance policy also requires the use of vehicle trackers fitted to the car to monitor the distance the driver covers.

If the owner exceeds the number of miles they stated they usually travel when taking out their policy, the extra charges are based on the number of miles they do over it.

For more of the latest vehicle tracking news and updates, check out our handy guide here!