Spring Statement 2026: key news for motorists

• The Chancellor presented the latest Spring Statement based on the interim update on the economy and public finances prepared by the Office for Budget Responsibility (OBR) on 3rd March 2026
• VED revenues are expected to increase by 15% in 2025-26, driven by new vehicle sales and the introduction of taxes for electric cars • Fuel duty income will rise with the 5p discount is phased out • Revenue from the new 'pay-per-mile' tax for electric vehicles will help ensure long-term financial stability Every year, the UK Chancellor delivers the ‘Spring Statement’, revealing the Government’s update on the economy, public finances, and spending plans in the Spring Statement, which is an update to the Autumn Budget. While there weren’t many major updates for motorists, the OBR’s ‘economic and fiscal outlook’ report touched up on:

The government expects to collect £9 billion in Vehicle Excise Duty (VED) - often called road tax or car tax - during the 2025-26 financial year. That is a 15% increase from the previous year. This bump is largely due to more new cars hitting the road, alongside the April 2025 VED reforms which included electric vehicles paying car tax for the first time and an increase in the first-year rates paid by hybrid car owners.
Related: Vehicle excise duty: Car tax changes from 1 April 2026.

In the Autumn Budget ‘25, the government announced the new ‘pay-per-mile’ tax for electric cars.
Until now, the Treasury has relied on petrol and diesel fuel duty as a steady source of income. But as more drivers make the switch to EVs, that traditional revenue stream is set to peak in 2028-29 and then steadily decline. Since the UK is facing significant long-term financial challenges, the OBR will be factoring the new EV tax into their upcoming Fiscal Risks and Sustainability (FRS) report. This will help them evaluate whether this new stream of revenue is effective enough or not to replace the petrol and diesel tax revenues.

Looking ahead to 2026-27, the government anticipates a 1.6% rise in fuel duty revenue, up from the £24 billion expected in 2025-26. This is primarily because the temporary 5p-per-litre discount will come to an end from September 2026 onwards as announced in the Autumn Budget 2025.
To avoid a sudden shock at the pumps, the government plans to phase out this discount in three stages. Fuel duty will rise by 1p per litre on 1 September 2026, 2p on 1 December 2026, and 2p on 1 March 2027. Then, from 2027-28 onwards, fuel duty rates will be increased annually in line with the Retail Price Index (RPI) measure of inflation. However, the government anticipates that this revenue will not climb forever. The government predicts fuel duty receipts will peak at £27 billion in 2028-29 before dropping by about £0.9 billion by 2030-31 because of the growing number of electric vehicles on the road that will eventually outweigh the increase in fuel duty rates. Related: New driving laws and rules you need to know for 2026 Now that you’re caught up with the Spring Statement, read the latest automotive news here.

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