UK motorists face a significant shake-up in driving laws and financial rules this December, with changes set to impact electric vehicle owners, petrol and diesel drivers, and those using London's roads. The final month of 2025 brings a suite of adjustments, some stemming directly from Chancellor Rachel Reeves's Autumn Budget, which aim to reshape motoring costs and incentives as the country approaches the Christmas period.
New Taxes and Charges for Electric and Hybrid Vehicles
A headline change announced in the Budget is the planned introduction of a pay-per-mile road charging system for electric vehicles (EVs) and plug-in hybrids. This new regime, known as VED+, is designed to recoup government revenue lost from dwindling fuel duty receipts as drivers switch away from petrol and diesel.
The system is currently under consultation, with finer details being finalised for an implementation date in Spring 2028. Under the initial proposal, drivers of fully electric cars will pay 3 pence per mile, while plug-in hybrid owners will be charged 1.5 pence per mile. While this change is a few years off, more information about the scheme's structure is expected to be unveiled soon.
Immediate Shifts for London and Company Cars
One of the most immediate changes affects electric vehicle drivers in the capital. The 100% Cleaner Vehicle Discount (CVD) for London's Congestion Charge will end on Christmas Day, 25 December 2025. This means all EV owners will need to pay the daily charge to enter the Congestion Charging Zone during operational hours, unless they qualify for another exemption.
Transport for London (TfL) confirmed the change, stating it was "originally planned." To manage the transition, a new tiered system of discounts will be introduced, available only for electric vehicles registered for the Auto Pay service.
Furthermore, from 1 December 2025, HM Revenue and Customs (HMRC) will begin applying new advisory fuel rates. These rates are used to calculate reimbursements for employees who use their company cars for business travel, or to reclaim costs for fuel used privately.
Support, Stability, and Ongoing Consultations
Despite the new taxes on the horizon, EV drivers will also see support. The government has committed a further £200 million to boost EV charger installations across the country. An additional £1.3 billion will also help more drivers access the Electric Car Grant, easing the upfront cost of switching.
For drivers of traditional internal combustion engine vehicles, some price stability is on the cards. The Chancellor's decision to extend the 5p per litre fuel duty freeze until September 2026 could help stabilise petrol and diesel prices at the pumps this December.
Finally, the Financial Conduct Authority (FCA) has extended a crucial deadline related to motor finance. Its consultation on a potential compensation scheme for consumers who may have lost out due to commission arrangements will now run until 12 December 2025. The FCA believes a coordinated scheme is the best way to ensure fair and consistent compensation while maintaining a functional motor finance market. A decision on extending the deadline for firms to provide final responses to complaints is expected by 4 December.
