Autumn Budget - Top 4 things motorists need to know

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Neil Goodwin is an in-house content writer at Select covering all things automotive. A former national newspaper journalist and PR consultant, he loves his motorcycles as much as he loves his cars....

Published 27 November, 2025, 11:28 GMT

Rachel Reeves delivers her Autumn Budget 2025
Mixed bag for motorists
Fuel duty frozen until September 2026
EVs and PHEVs face new pay-per-mile tax
Threshold rises for EV expensive car supplement

Now that the dust is settling on the Autumn Budget 2025, here are the top 4 things that motorists need to know.

Chancellor Rachel Reeves used her fiscal update to announce a raft of measures, including a three-year freeze on income tax thresholds… and a so-called ‘milkshake tax’ on sugary dairy drinks.

But what was in the budget for drivers - and is there good news or bad news waiting around the bend?

Well, it’s a bit of a mixed bag. Here we take a look at the 4 key talking points and attempt to sum it all up as simply as we can.

Pay-per-mile ‘eVED’ plans revealed

Drivers of electric vehicles don’t pay fuel duty. How can they when they don’t buy petrol or diesel, which is where the duty is levied?

That’s left a big, gaping hole in the Government’s wallet as more people transition to greener motoring.

So, to plug that gap, drivers of EVs and plug-in hybrids will now face an additional pay-per-mile tax, called Electric Vehicle Excise Duty, or eVED.

Precise details of the charge are still to be ironed-out (including how the taxman is actually going to check how many miles you’re doing annually). Vans, buses, motorcycles, coaches and HGVs are EXCLUDED.

But it’s all due to kick off in April 2028.

EVs will pay 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile, with the rates going up each year with inflation.

If you’re an EV driver who racks-up 10,000 miles a year, you’ll have to shell out £300. If you do that in a PHEV, you’ll pay £150.

Big question: will the new pay-per-mile tax turn people away from zero emissions motoring?

In our humble opinion, it shouldn’t.

Why do we say that? Well, have a look at our fuel cost calculator - which works out how much you’d pay annually in fuel/charging depending on the type of car you drive.

Have a play around with the settings and you’ll see that if you drive an EV, and you can charge from home on a low off-peak rate, you can save more than £1,000 a year in comparison to running a petrol or diesel car (when you cover 10,000 miles annually, as above).

Yes, the pay-per-mile tax is going to eat into those savings, but you’re still going to be quids-in overall.

There’s another potential benefit.

The Government says some of the proceeds from eVED - around £2bn annually by 2029-30 - will be committed to local authorities to fix potholes. And that’s surely got to be a good thing, given the absolute state of them.

Expensive Car Supplement - threshold shifts for EVs

This is a biggie - and potentially more impactful than the pay-per-mile scheme.

The expensive car Vehicle Excise Duty (VED) supplement has been around since 2017.

It’s an additional fee levied on cars that cost more than £40,000 new. It’s slightly complicated, but you basically have to fork-out £425 annually for five years (it starts when the car is a year old), on top of the regular £195 road tax bill for cars registered on or after 1 April 2017.

In the past, EVs were exempt from the ‘luxury’ car tax - but they were dragged into the mix in April 2025, much to the dismay of many.

The thing is, EVs can be more expensive than their traditionally-fuelled equivalents, which means many have a list price in excess of £40,000.

In the Autumn Budget, however, Rachel Reeves INCREASED the expensive car tax threshold from £40,000 to £50,000. That’s for zero-emission cars only.

And it means more folks can enjoy an EV without being clobbered with an extra £425 bill each year.

It applies to EVs registered from 1 April 2025 onwards and the changes come into effect from 1 April 2026.

What sort of cars (with a list price of £50k or less) will now be excluded from the expensive car supplement?

It brings a whole host of popular EVs into play, including the Tesla Model Y (RWD), Long Range versions of the Tesla Model 3, the Audi Q4 e-tron, BMW iX1 and iX2, and the Polestar 2. That's all obviously dependent on the trim and what optional extras you might choose to bolt on.

Fuel Duty reprieve

Fuel duty has been frozen once again… but it’s only a reprieve.

Fuel duty for petrol and diesel has been held at 52.95p per litre since March 2022, when then Chancellor Rishi Sunak announced a 5p cut from the previous rate of 57.95p per litre. That latter 57.95p per litre rate has been frozen since 2011.

And Rachel Reeves has decided not to raise either the frozen rate or to lift the ‘temporary’ 5p cut (which is now three years old), so fuel duty will remain at 52.95p per litre.

So, good news on the face of it. But it won’t last.

There’s going to be a staggered reversal of the 5p cut, starting with 1p from September 2026, followed by 2p in December 2026 and then 2p in March 2027.

After that, fuel duty will rise annually in line with inflation.

Electric Car Grant and public charging

In other EV news, the Government has decided to extend the Electric Car Grant, which was announced earlier this year and knocks up to £3,750 off the price of a new battery-powered vehicle.

That grant is now going to be extended to run until 2029-30, taking the total funding for the scheme to £2bn.

Remember that all new cars will have to be electric or hybrid from 2030 onwards, when a ban on the sale of new petrol and diesel cars comes into force.

The Government is also going to chuck more money at our public EV charging infrastructure.

An additional £100m will go to the EV charging network itself while another £100m is allocated to local authorities and public bodies ‘to support the training and deployment of specialist staff, accelerating the rollout of public chargepoints’.

These investments will build on the almost 87,000 public chargepoints already available across the country, the Treasury says.

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Autumn Budget - Top 4 things motorists need to know