Autumn Budget 2024: What it means to UK motorists - Select Car Leasing
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Autumn Budget 2024: What it means to UK motorists

A freeze on fuel duty, millions more pledged to tackle potholes, and a U-turn on top of a U-turn when it comes to double-cab pick-ups - here’s EVERYTHING motorists need to know about the Autumn Budget 2024.

New Chancellor Rachel Reeves has delivered her first budget, making it clear from the off that rises in tax were necessary in order to find an extra £40bn in funds.

But there was some good news for motorists, with the Labour government choosing to freeze fuel duty until 2026 in a surprise move that went against most predictions.

If you, like many motorists, are plagued by potholes in your local area, there’s relief on the horizon with an extra £500m funding pledge.

But it’s not all smooth driving. There are plans afoot to treated double cab pick-ups with a payload of one tonne or more as ‘cars’ from April 2025 onwards in a move that could have huge implications when it comes to things like Benefit in Kind (BiK) payments.

We’ve combed through the entire Autumn Budget 2024 official document - and here’s the low-down:

Fuel duty freeze

In the run up to the Autumn Budget, most political commentators predicted a fuel tax double-whammy. Many expected fuel duty - currently 52.95p a litre - to be un-frozen with extra added on, in line with inflation. 

But the Chancellor bucked expectations by keeping fuel duty frozen until 2026.

The Budget says: “The cost of living remains high, with potential fuel price volatility amid global uncertainty. Therefore, the government will protect motorists by freezing fuel duty at current levels for one year to support hard-working families and businesses. The 5p cut will be extended for a further 12 months and the planned increase in line with inflation for 2025-26 will be cancelled. This represents a saving of £59 in 2025-26 for the average car driver.”

And what about cheaper fuel in general?

A section of the Budget document talks about encouraging ‘competition in the road fuels market’ while helping motorists find forecourts with the cheapest fuels. The Govt will set up a ‘Fuel Finder’ scheme that lists live fuel prices by the end of next year. The Treasury says that its ‘scenario modelling’ suggests pump prices could ‘reduce by 1-6p per litre as a result of these measures, helping to ensure that drivers get a fair deal for fuel across the UK.”

Electric vehicles

There’s a raft of measures announced when it comes to EVs.

The Govt will invest more than £200m in 2025-26 to accelerate EV chargepoint rollout,  including funding to support local authorities to install on-street chargepoints across England. And don’t forget there are now more than 70,000 public chargepoints in the UK.

The plug-in vehicle grant for vans will be extended for 2025-26.

There’s good news for company car drivers, too. Reeves has promised that benefit-in-kind (BIK) tax rates will continue to incentivise the uptake of fully electric company cars, with the BIK rate remaining relatively low - up to 9% by 2029-30.

It's looking less rosy for plug-in hybrid drivers. BIK rates will rise to 18% across the board (no matter what the electric range might be) by 2028-29 and to 19% by 2030.

Road tax

The VED (Vehicle Excise Duty, or ‘road tax’) picture is also now clear.

The government will change the VED ‘First Year Rates’ for new cars registered on or after 1 April 2025 to ‘strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars’.

What does that actually mean?

Well, if you’ve got a zero emission EV, you’ll pay just a £10 first year rate until 2029/30.

Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 for 2025-26.

Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-26.

And - here’s the kicker - all other rates for cars emitting 76 g/km of CO2 and above will DOUBLE from their current level for 2025-26.

Now might be time to start having a look at your future options - so check out our current electric car leasing deals.

Potholes

The Department for Transport (DfT) is being handed a cool £30 billion in funding for 2025-26 - a £1.2bn year-on-year increase.

And that cash includes an extra £500 million to fix potholes - in addition to the Govt’s existing pledge to mend a million potholes per year.

Will that £500m make a material difference, or is it a drop in the ocean when set against the vastness of the problem? Only time will tell.

Double-cab pick-up - another U-turn

Back in February this year, we reported how the HMRC were planning to start treating double-cab pick-ups as ‘cars’, rather than commercial vehicles, in terms of the way they are taxed. That would have a huge knock-on effect when it comes to how much Benefit in Kind (BIK) tax company car drivers have to pay, with big rises anticipated.

After a huge industry outcry, the Government performed a U-turn a few weeks later and reversed the decision.

But - lo and behold - we’ve now been treated to yet ANOTHER U-turn.

The Budget document makes it clear that from 1 April 2025, double-cab pick-ups with a payload over a tonne ‘will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits’.

Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a double-cab pick-up before 6 April 2025. They will also be able to use the previous treatment, until either disposal of the vehicle, the expiry of the lease, or the 5 April 2029 - whichever comes first.

Scrapping of unaffordable road schemes

In order to balance the books, Reeves said some planned road schemes were now deemed ‘unaffordable’ and were being scrapped.

They include:

A5036 Princess Way (Liverpool)

A358 Taunton to Southfields (Somerset)

M27 J8 Southampton (Hants)

A47 Great Yarmouth Vauxhall Roundabout (Suffolk)

A1 Morpeth to Ellingham (Northumberland)


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Wednesday, 06/11/2024