The UK Autumn Budget 2025 brings a mix of changes that matter to anyone who drives. Some updates affect how much it costs to run a car, while others shape what driving could look like over the next few years.
This blog breaks down the key motoring announcements from the Budget in clear terms. You will get to know what has been confirmed, what is coming next in road tax rates and VED rules for all kinds of vehicles.
If you own a car, are thinking about switching to an electric vehicle, or simply want to understand how new decisions may affect everyday driving costs, this overview will help you make sense of it.
What to expect from the 2025 autumn budget
The autumn 2025 budget outlines how motoring rules and driving costs will change over the coming years. Some measures apply soon, while others are planned further ahead.
Now to 2026
- Fuel duty remains frozen
- Motability scheme changes begin
- EV grants and charging support continue
From April 2026
- Higher price threshold for electric cars before extra charges apply
From 2027
- Fuel duty expected to rise with inflation
From April 2028
- Pay-per-mile charging starts for electric and plug-in hybrid cars
Beyond 2028
- Further changes as electric vehicles become more common
Each of these points is covered in more detail below.
Pay-per-mile tax for electric and hybrid cars
One of the biggest announcements in the Autumn Budget is a new pay-per-mile charge for electric and plug-in hybrid cars. This scheme is set to begin from April 2028 and is designed to replace falling fuel duty income as more drivers move away from petrol and diesel.
Under the plan, fully electric cars will pay 3p per mile, while plug-in hybrids will pay 1.5p per mile. The government says this is roughly half the level of tax paid by petrol drivers through fuel duty today. The charge will rise over time in line with inflation.
The Chancellor said the move would help fund road maintenance and support further investment in public charging. A formal consultation is expected before the scheme is introduced, with more detail on how mileage will be recorded.
Changes to the Motability scheme
The Budget confirmed reforms to the Motability scheme, which supports disabled people by allowing them to lease a vehicle using mobility benefits. The government said the scheme should focus on accessibility, not subsidising high-value vehicles.
As part of the changes, premium car brands such as Audi and Mercedes will no longer be available through the scheme. Ministers say this will help control costs and refocus support on those who need it most.
The reforms are expected to reduce choice for some users, particularly those who relied on larger or higher-spec vehicles for accessibility needs. Disability groups have welcomed clarity but raised concerns about how the changes will affect individual users.
Fuel duty: what drivers should expect
Fuel duty will remain frozen until 2026, extending the existing 5p-per-litre cut that has been in place since 2022. This means drivers will not see an immediate tax rise at the pump as a result of this Budget.
However, the Chancellor confirmed that fuel duty is expected to rise again after this period. From 2027, increases are planned to follow inflation, which is likely to push fuel prices higher over time.
The government acknowledged that fuel duty freezes have reduced tax income but said the short-term extension is intended to support households while longer-term transport funding changes are introduced.
For Electric Vehicles
From April 2026, the Expensive Car Supplement threshold for electric vehicles road tax will rise from £40,000 to £50,000, reducing extra tax for many EV buyers. Alongside this, fresh funding for electric vehicle charging with £200 million has been allocated to speed up the rollout of public charging points, particularly outside major cities.
The government also confirmed that the electric car grant will be extended between 2026 and 2030, helping to reduce upfront costs for buyers of eligible EVs. The average annual cost of the scheme is expected to be around £300 million.
While charging availability continues to improve, drivers remain concerned about rising public charging costs. Ministers said improving competition and transparency would be key to keeping prices under control.
How the vehicle industry is reacting
Industry feedback to the Autumn Budget has been mixed, with clear praise for some measures and concern about others.
The Society of Motor Manufacturers and Traders welcomed the government’s recognition of the automotive sector as strategically important and backing it with investment, including changes to the expensive car supplement and extra funding for the electric car grant and charging support. However, SMMT said the introduction of a new electric-Vehicle Excise Duty at this stage could slow demand for electric vehicles.
SMMT also expressed specific concern about the proposed pay-per-mile electric vehicle tax, suggesting it could deter consumers and make it harder for manufacturers to meet zero-emission vehicle targets unless the system is rethought collaboratively with industry.
Fleet groups also weighed in. The Association of Fleet Professionals noted that the new mileage-based charge for electric and plug-in hybrid vehicles will require discussion with the sector about timing and implementation, and warned that it should not hamper the shift to electrification.
Commentators from data and advisory firms have also pointed out that while increases to the Expensive Car Supplement threshold may help some drivers, the new mileage tax could increase running costs, making grant support and infrastructure investment even more important to maintain EV adoption growth.
FAQ's
Pay-per-mile tax is a proposed system where drivers are charged based on the number of miles they drive, rather than a flat road tax.
Making UK car data easy to understand, one blog at a time. As a part of CarAnalytics Content Team, she combines her SEO experts, data analysts, and digital writers dedicated to helping drivers make informed, confident car-buying decisions. She specialises in translating complex topics like MOT, write-off categories, and outstanding finance and more into clear, accessible guides.
From car tax a ULEZ rules to pricing trends and ownership tips, she covers every step of buying, selling, and owning a used car in the UK. Backed by real data and industry insight, she aims to give readers clarity, confidence, and peace of mind. When she’s not writing, she’s likely enjoying a quiet countryside drive.
