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UK Autumn Budget 2025: Essential Information for Drivers
Here you’ll find all the essential automotive news from this year's Autumn Budget and how you may be affected
Words by: Erin Baker
Published on 26 November 2025 | 0 min read
Electric-car drivers were the motorists most affected by the Autumn Budget today, with big changes to the way they are taxed.
The most significant motoring announcement by Rachel Reeves was of the long-awaited “pay-per-mile” tax for electric cars, to make up for the fact they don’t pay fuel duty as drivers of combustion-engined vehicles do. From April 2028, EV drivers will pay 3p per mile, and plug-in hybrid owners will pay 1.5p per mile, with both amounts rising annually. Drivers will pay up front, based on their own annual estimates. Any shortfall will be paid for at the end of the year, and any overpayment will be carried forward into the following year. The tax will be paid alongside traditional Vehicle Excise Duty, or VED. The Government expects to collect £1.4bn in 2029-30 and £1.9bn in 2030-3, equivalent to about 25 per cent of the money lost from fuel duty by 2050. In a small slice of good news for EV owners, however, the price threshold for the Expensive Car Supplement (ECS) VED rate on electric vehicles will rise from £40,000 to £50,000 from April 2026. The ECS has been a significant extra financial burden on electric-car drivers, because it is applicable for the first six years of a car’s life, and a disproportionate number of electric cars cost more than £40,000. According to Autotrader data, by lifting the applicable threshold for the tax from £40,000 to £50,000, it takes 51 per cent of all new electric cars out of the tax, up from just 37 per cent of all EVs when it was set at £40,000. According to Rachel Reeves, this change will save “over a million motorists” £440 a year. The Government has also pledged to expand the Electric Car Grant applying to EVs priced under £37,000 to 2030, spending about £300m a year to support this, and taking total funding for this grant to £2bn. There will also be a further £200m to accelerate the roll-out of public charging, a consultation on permitted development rights for cross-pavement and on-street charging, and 100 per cent business-rate relief on public charging installation for the next decade. In good news for petrol and diesel drivers, the Government has decided to keep fuel duty rates frozen for another five months, until September 2026. After that, the temporary 5p cut will be phased out gradually. From April 2027, fuel duty will start increasing each year in line with inflation. The Government also promised to delay changes to the Employee Car Ownership Schemes which would have forced automotive workers to pay company car tax on the very vehicles they make and purchase. On the other hand, it’s a blow for the many Motablity drivers who like to upgrade to a premium model, and those affected brands who sell a significant number of cars through Motability. The Chancellor announced that there will be “no more luxury cars” offered on the scheme, amid public criticism. Motability Operations has confirmed that Audi, BMW and Mercedes are among the brands being removed from its line-up with immediate effect. The scheme intends to switch to more British-built cars, so expect a lot more models from Nissan, Mini and Toyota via the scheme. So, a mixed set of results for drivers from this Budget, but undoubtedly, it has not been a helpful set of announcements for the further uptake of electric cars. Ian Plummer, Chief Commercial Officer of Autotrader, said, “On electric vehicles, the Chancellor is driving with the handbrake on. The Office for Budget Responsibility estimates that there will be 440,000 fewer electric cars on the road thanks to the introduction pay-per-mile charging from 2028. This sends completely the wrong signal as only 130,000 of these sales are offset by moves to make EVs more affordable, such as raising the Expensive Car Supplement from £40,000 to £50,000”. Find your Next Vehicle on Autotrader Now your equipped with your research, it’s time to start your search for your next vehicle and we’re here to help providing a simple car buying experience. Browse a great range of brand new cars at Auto Trader
The most significant motoring announcement by Rachel Reeves was of the long-awaited “pay-per-mile” tax for electric cars, to make up for the fact they don’t pay fuel duty as drivers of combustion-engined vehicles do. From April 2028, EV drivers will pay 3p per mile, and plug-in hybrid owners will pay 1.5p per mile, with both amounts rising annually. Drivers will pay up front, based on their own annual estimates. Any shortfall will be paid for at the end of the year, and any overpayment will be carried forward into the following year. The tax will be paid alongside traditional Vehicle Excise Duty, or VED. The Government expects to collect £1.4bn in 2029-30 and £1.9bn in 2030-3, equivalent to about 25 per cent of the money lost from fuel duty by 2050. In a small slice of good news for EV owners, however, the price threshold for the Expensive Car Supplement (ECS) VED rate on electric vehicles will rise from £40,000 to £50,000 from April 2026. The ECS has been a significant extra financial burden on electric-car drivers, because it is applicable for the first six years of a car’s life, and a disproportionate number of electric cars cost more than £40,000. According to Autotrader data, by lifting the applicable threshold for the tax from £40,000 to £50,000, it takes 51 per cent of all new electric cars out of the tax, up from just 37 per cent of all EVs when it was set at £40,000. According to Rachel Reeves, this change will save “over a million motorists” £440 a year. The Government has also pledged to expand the Electric Car Grant applying to EVs priced under £37,000 to 2030, spending about £300m a year to support this, and taking total funding for this grant to £2bn. There will also be a further £200m to accelerate the roll-out of public charging, a consultation on permitted development rights for cross-pavement and on-street charging, and 100 per cent business-rate relief on public charging installation for the next decade. In good news for petrol and diesel drivers, the Government has decided to keep fuel duty rates frozen for another five months, until September 2026. After that, the temporary 5p cut will be phased out gradually. From April 2027, fuel duty will start increasing each year in line with inflation. The Government also promised to delay changes to the Employee Car Ownership Schemes which would have forced automotive workers to pay company car tax on the very vehicles they make and purchase. On the other hand, it’s a blow for the many Motablity drivers who like to upgrade to a premium model, and those affected brands who sell a significant number of cars through Motability. The Chancellor announced that there will be “no more luxury cars” offered on the scheme, amid public criticism. Motability Operations has confirmed that Audi, BMW and Mercedes are among the brands being removed from its line-up with immediate effect. The scheme intends to switch to more British-built cars, so expect a lot more models from Nissan, Mini and Toyota via the scheme. So, a mixed set of results for drivers from this Budget, but undoubtedly, it has not been a helpful set of announcements for the further uptake of electric cars. Ian Plummer, Chief Commercial Officer of Autotrader, said, “On electric vehicles, the Chancellor is driving with the handbrake on. The Office for Budget Responsibility estimates that there will be 440,000 fewer electric cars on the road thanks to the introduction pay-per-mile charging from 2028. This sends completely the wrong signal as only 130,000 of these sales are offset by moves to make EVs more affordable, such as raising the Expensive Car Supplement from £40,000 to £50,000”. Find your Next Vehicle on Autotrader Now your equipped with your research, it’s time to start your search for your next vehicle and we’re here to help providing a simple car buying experience. Browse a great range of brand new cars at Auto Trader