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UK Autumn Budget 2026: 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

Catherine Kent

Words by: Catherine Kent

Published on 28 October 2026 | 0 min read

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Fuel duty frozen … again

In response to the soaring fuel costs caused by the war in Iran, the Government has decided to keep fuel duty frozen until July 2027. As a result, the tax on petrol and diesel will remain at 52.95p per litre with the temporary 5p cut first introduced in 2022 remaining in place.

Drivers using their cars for work

For those using their own car or van for work, the Government is fixing the tax-free rate at 55p per mile for the first 10,000 business miles and it is increasing the mileage rate above 10,000 from 25p to 35p per mile. As a result of the changes, it says a business user covering 15,000 miles per year will make a tax saving of up to £300.

Pay per mile for EVs

Following a consolation the Government has confirmed it will go ahead with the Electric Vehicle Excise Duty (eVED) it announced in last year’s autumn budget. This “pay-per-mile” tax on electric cars and plug-in hybrids will take effect from April 2028 and it is designed to make up for the loss in takings in fuel duty caused by people switching from petrol or diesel vehicles.

The tax will be charged in addition to traditional Vehicle Excise Duty (VED) with EV drivers paying 3p per mile and plug-in hybrid owners paying a lower rate of 1.5p per mile. Drivers will need to pay up front, based on their own annual estimates with the cost per mile set to rise annually. Any shortfall will be paid for at the end of the year, and any overpayment will be carried forward into the following year.

The Government remains vague about how the admin for this new tax will work in practice, but it has said it is working on a mileage estimation tools and software to help with implementation.

Electric Car Grant

No changes were announced for the Electric Car Grant. The grant launched in July 2025 and applies to EVs priced under £37,000 and fulfilling certain sustainability criteria. The Government has put aside about £300m a year to support this until 2030, and in total it will spend £2bn on funding the grant. So far over 190,000 drivers have taken advantage and received up to £3,750 off the price of a new electric car.

Home charging

The Government has pledged to extend the VAT cut on domestic electricity, reducing the tax from 5 per cent to zero until July 2027 and cutting bills by up to £50. This keeps the cost of home charging relatively low, while VAT on public charging remains as 20 per cent.

Public charging costs

We do have a small piece of good news for those relying on public charging. From spring 2027 £100m will be provided over two years to reduce the cost of public charging at slower lower-powered public chargers on residential streets where drivers typically plug-in over night. The Government says this could save drivers an average of £150 per year, though it won’t help those who regularly use expensive rapid chargers on longer motorway journeys, nor will it offset the cost of the upcoming eVED.

Additionally, the Government has already pledged £600m to help build out the public charging network, including £480m for the Local EV Infrastructure fund supporting local authorities and charging operators to install 100,000 chargers across England.

The Autotrader verdict

So, John Healey spoke of “breathing space” in his first budget, but will motorists feel any benefits? The continued fuel duty freeze will help drivers filling up at the pumps, but for those looking to make the switch to electric, the outlook remains mixed. Autotrader's Chief Customer Officer Ian Plummer says of the budget, “The Chancellor’s fuel duty freeze will be a relief for millions of motorists struggling with the cost of living. But the Government is still planning to hit electric vehicle drivers with pay per mile duty in 2028, putting up costs and putting a handbrake on their own efforts to get people buying electric cars”.

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