Home Money Sadiq Khan was set to introduce a £2 pay-per-mile tax for driving in central London that could have cost £40 for a return trip.

Sadiq Khan was set to introduce a £2 pay-per-mile tax for driving in central London that could have cost £40 for a return trip.

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Sadiq Khan planned to charge drivers £2 per mile for driving in central London from September 2026, leaked proposals show.

Sadiq Khan planned to charge drivers £2 per mile to drive in central London, leaked proposals show.

The almost implemented plan was almost presented for September 2026, as the main policy of the mayor’s last term.

If it had been carried out, it would probably have turned out to be one of the most controversial automobile plans in recent history.

Sadiq Khan planned to charge drivers £2 per mile for driving in central London from September 2026, leaked proposals show.

Seen and revealed by London Centric, the leaked plans show that the Mayor of London and TfL conspired to charge drivers up to £2 per mile for driving within the Congestion Charge zone, as well as imposing a daily tax of £5.

Seen and revealed by London Centric, the leaked plans show that the Mayor of London and TfL conspired to charge drivers up to £2 per mile for driving within the Congestion Charging zone, as well as imposing a daily tax of £5.

‘Project Gladys’, as they code-named it internally, modeled how the pay-per-mile measure would lead to a drastic reduction in the number of cars on the roads.

Leaked plans reported by Focused on London show that the Mayor of London and TfL conspired to charge drivers up to £2 per mile for driving within the Congestion Charge zone, as well as imposing a daily tax of £5.

Under the proposals, for which pricing was not finalised, the original Ultra Low Emissions Zone, ‘Inner London’, would likely get a pay-per-mile charge of 60p per mile. The rest of Greater London would have a rate of 40 pence per mile.

According to London Centric, TfL modeled the exorbitant amounts motorists would be expected to pay under the ‘Next Generation Charging’ scheme.

Driving a ULEZ-compliant car through ‘central London’ on a 30-mile round trip from Highgate to Fulham would have cost the motorist £18 in pay-per-mile tax.

Currently it costs only what a driver spends on fuel.

A return from Upminster to Oxford Circus would have risen from £15 to £40 under the proposed changes.

The effect on London traffic levels would have been dramatic: London Centric claimed that modeling showed there would have been 600,000 fewer car journeys, 170,000 additional bus journeys and 210,000 walking journeys.

In September this year, Sadiq Khan categorically ruled out the introduction of the radical tax system.

In September this year, Sadiq Khan categorically ruled out the introduction of the radical tax system.

The implementation process was also mapped out in the leaked documents, with an initial trial period followed by public consultations throughout 2024.

In 2025, London’s signage would have been replaced and then in September 2026, the full pay-per-mile scheme would have been implemented.

London Centric reported that until the end of 2023 “with the mayor’s backing, TfL has pressed ahead with the development of the scheme, having already invested millions of pounds in the project and the necessary technology.”

But then, in September, Sadiq Khan categorically ruled out introducing a radical tax system.

Speaking to the London Assembly, Mr Khan said: ‘I want to be very clear. A pay-per-mile system is not on the table or on my agenda. I will not change the targets of the ULEZ emissions standards.’

Protesters opposing the extension of London's ultra-low emissions zone demonstrate outside BBC Broadcasting House on July 22, 2023, in London.

Protesters opposing the extension of London’s ultra-low emissions zone demonstrate outside BBC Broadcasting House on July 22, 2023, in London.

According to London Centric, the reason for the multi-million pound U-turn was strong opposition in the run-up to the mayoral election, where Sadiq Khan was accused of creating a “war on motorists”.

The revelation of ‘Project Gladys’ comes after the Chancellor refused to introduce pay-per-mile tax in the Budget, despite pressure to introduce the new road pricing system to replace taxes on conventional cars in all over the UK.

The latest recommendations suggest it could generate £30bn in cash flow for the economy and reduce congestion on busy routes.

Pay per mile: What is it?

As the name suggests, pay-per-mile road tax would see drivers pay taxes based on the number of miles they drove.

The more you drive, the more you pay.

It would replace the current VED or ‘road tax’ system, which taxes a vehicle depending on the type of vehicle, its age, the type of fuel and, crucially, its measured CO2 emissions. More polluting vehicles pay a higher VED rate.

Iceland and New Zealand already have a pay-per-mile tax policy.

How popular or unpopular is national pay per mile?

Go Compare surveyed 2,000 drivers in December 2023, and just over half (53 percent) voted against a pay-per-mile tax system.

Unsurprisingly, 52 per cent said they opposed the plan because they felt it would be unfair to vehicle owners who rely most on their engines, especially those who live in rural and remote areas.

Young drivers were the most opposed: 60 percent of 18- to 24-year-olds felt this way.

In contrast, among the quarter (26 percent) of respondents who would accept pay-per-mile, it was primarily older drivers ages 55 and older (one-third).

Of the 26 percent who said they would support the change, 76 percent thought it would create a fairer system.

The next most popular reason was the positive effect it would have in minimizing unnecessary car use, reducing congestion and emissions: 59 per cent voted in favour.

About 44 percent said they would benefit because they would pay less taxes.

While this may seem fair to some drivers, there are stark warnings about how unfair it will be to rural drivers who have no choice but to drive further.

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