Drivers could save £140 on car insurance with proposed car tax method – ‘It makes sense’

Fuel duty: Expert suggests road pricing system

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Almost one-fifth of motorists who drive less than 5,000 miles per year could save £123 on average by swapping to a pay-by-mile policy. According to new research, usage-based car insurance could save the increasing number of low mileage drivers an average of £141 per year, which could help offset the rising cost of living.

The average cost of a pay-per-mile policy is £585, but this falls to £430 for motorists who drive less than 5,000 miles per year. 

For those who drive less than 2,000 miles per year, the average cost drops as low as £306.

The data, from, revealed that almost half of motorists are making fewer journeys, and 31 percent are using less fuel to help mitigate rising driving costs.  

Many motorists are now looking to reduce costs as one in three drivers is worried that they won’t be able to cover the cost of driving in the coming weeks. 

Alex Hasty, director at, said that motorists were increasingly driving fewer miles each year, whether that’s to save money or for the environment. 

With the rise of working from home and hybrid working, many have to commute less, meaning their cars may stay off the roads for a longer period of time.

He added: “Our research shows that switching to a pay-per-mile policy could save low mileage drivers more than £100. 

“Given the cost-of-living crisis, these savings could help drivers who are looking to cut driving costs.

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“Pay-per-mile policies may also benefit motorists who are unsure about how often they will use their cars, as any payments will be based on the miles driven each month, rather than their expected annual mileage.  

“Drivers can make sure they have the right insurance policy suited to their needs by shopping around when their policy comes up for renewal. 

“With, customers can also set up automated car insurance renewal quotes and be notified ahead of their renewal date to help them find great deals and save money.”

Pay-per-mile driving has been touted as a potential replacement for the current system of taxation in the UK.

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It would work by charging drivers a small amount of money for every mile that they drive. 

Some have suggested that drivers could be given a quota of “free miles” before they start being charged, with rural motorists being given a larger amount.

It is believed this would help reduce congestion and emissions as drivers would be conscious of the amount they drive.

According to a By Miles survey, 36 percent of drivers said they drive less since switching to a pay-by-mile policy.

More than eight in 10 confirmed it was specifically the pay-as-you-drive aspect that’s influenced them to cut the number of miles they’re driving. 

James Blackham, CEO at By Miles, said: “The cost-of-living crisis is baring its teeth for drivers – with fuel, repairs and the price of cars on the rise – so it was sadly not a surprise to learn that many of us are having to make changes.

“The decline in mileage isn’t new, as a nation we’ve been driving less each year for over a decade – yet premiums with traditional insurance policies haven’t followed this trend. 

“Pay-by-mile insurance means that the less you drive, the more you save – so if your car is parked up then so are your premiums. 

“At a time when the cost of driving is through the roof, it might make sense to switch to pay-by-mile if you are a low mileage driver.”

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