The Autumn Budget for 2025 is Here
With the Autumn Budget having landed, drivers, EV owners and businesses will be learning what changes are set to come in the automotive sector, and when they will come into office.
In this blog, we breakdown the Autumn Budget 2025, helping you understand exactly what it means for you, your vehicle and your wallet. Here’s a quick look at the key changes that are on the way!
Swansway Motor Group Directors React to the Autumn Budget 2025
On EV Pay Per Mile Proposals, Peter and David Smyth, Directors at Swansway Motor Group said:
“While a pay per mile system for EVs sounds fair on the surface, in reality it raises a lot of unanswered questions. It would rely heavily on drivers submitting accurate mileage and being completely honest and there’s still very little clarity on how this would actually be regulated or enforced in practice.”
On Salary Sacrifice and Benefit in Kind Changes, Peter and David also said:
“This change will have a significant financial impact on our family business. Based on our current usage, the Budget announcement around salary sacrifice and benefit in kind changes will cost Swansway Motor Group around half a million pounds per year. It’s a sizeable increase, especially at a time when the industry is already under pressure.”
Changes for EV Owners
Electric Vehicles - After growing talk of a new pay per mile road pricing system for electric cars. Suggestions from analysts are right, as the Chancellor of the Exchequer announced that there will be a new mileage tax for electric vehicles from April 2028. In 2028-29, the charge will equal £0.03 per mile for battery electric cars and £0.015 per mile for plug-in hybrid cars, with the rate per mile increasing annually with CPI. Yet to be introduced, but a change that will be on the way.
Response from Omoda & Jaecoo on the changes made to EVs
Gary Lan, CEO at OMODA&JAECOO UK said, “Today’s budget introduces a new 3p-per mile EV tax from 2028-2029, and we want to make the transition to electric driving as smooth as possible for our customers immediately - not three or four years from now.
“Our EV Tax Rebate for the OMODA E5 and JAECOO E5 effectively covers the first few years of this new tax, giving drivers the equivalent of thousands of miles of zero-cost motoring.
“These vehicles represent the forefront of electric mobility, and this initiative reflects our commitment to making clean, efficient, and intelligent transportation more accessible to UK drivers from day one.”
Fuel and Day to Day Running Costs
Fuel Duty - Another announcement made, is that Fuel Duty will be frozen at its current rate until September 2026, to help replace fuel duty revenue as more drivers go electric.
However, Fuel Duty is set to increase for the first time in 16 years. After being frozen until September 2026, in April 2027, Fuel Duty will increase, in line annually with the RPI measure of inflation. Fuel Duty has not risen since 2010 before this point.
After being frozen for several years, the extension of the freeze continues and in 2027, Fuel Duty will rise with the new duty rates. The changes made will have an immediate impact on the cost of running a petrol or diesel car. We may also hear more about VAT on public EV charging, as well as fresh incentives aimed at encouraging lower emission motoring.
Affordability for Drivers and Households
If the Chancellor adjusts personal tax thresholds, that could affect how much disposable income households have for running or replacing their cars. Any boost to green home or green transport incentives may also help drivers who are thinking about switching to an EV or upgrading their vehicle to a more efficient model.
How These Changes Might Affect Drivers
Tomorrow’s announcement could influence everything from the type of car people choose, to how much they spend on the road each day.
Everyday Drivers - Any movement on fuel duty or new EV road pricing could mean small changes to weekly running costs.
Company Car Users - Updates to BiK or salary sacrifice schemes may change which models offer the best value.
Used Car Buyers - Shifts in disposable income or running costs might guide shoppers towards more economical models.
Local Businesses - Corporation tax or business rate changes could impact fleet planning and future investment in greener transport.
What’s Already Changed in Recent Budgets that Affects Drivers
Here are some of the major past budget measures, particularly from the last couple of years, which are already impacting motorists:
- Fuel Duty Freeze - The Autumn Budget 2024 extended the freeze on fuel duty for 2025, saving drivers on average around £59 per year per car.
- Vehicle Excise Duty (VED) | Road Tax Changes - On 1 April 2025, EVs no longer were exempt from VED, even zero emission vehicles will pay a first year rate. The ‘Expensive Car Supplement,’ for cars over £40,000 list price, now applies to EVs, adding up to £425 a year for five years. New VED first year rates: e.g. for vehicles emitting 1 - 50 g/km CO2, the rate is increasing to £110.
- Benefit in Kind (BiK) for Company Cars - BiK rates for zero emission vehicles will increase gradually, rising 2 percentage points in 2028-29 and 2029-30. For plug-in-hybrid vehicles (PHEVs), BiK rates increased.
- Employer National Insurance Contributions - Employer NICs increased from 13.8% to 15.0% which started in April 2025, reducing the employer’s earnings threshold from £9,100 to £5,000. This hit business costs for providing company cars but could make salary sacrifice EV schemes more attractive as the NICs saving dynamic shifts.
- Capital Allowance | Green Investment - The 100% first year capital allowance for zero emission vehicles (and EV charging infrastructure) has been extended until March 2026 for corporation tax purposes.
Summary
Now that the Autumn Budget 2025 has been revealed, and with a few big changes set to come, there is a lot for drivers to get their heads around. We hope this blog gave you a clear breakdown of what changes will affect the automotive sector.