Chancellor Rachel Reeves has delivered a significant Autumn Budget containing six major announcements that will directly impact millions of drivers across the United Kingdom.
The Labour Chancellor addressed the House of Commons on Wednesday, outlining a series of measures affecting motorists, electric vehicle owners, and road users. The budget includes both immediate relief and long-term structural changes to how drivers are taxed and supported.
Electric Vehicle Changes and New Charges
Electric car drivers will face a new pay-per-mile charge starting in April 2028, according to analysis from the Office for Budget Responsibility. The charge will apply to both electric and plug-in hybrid vehicles at approximately half the current fuel duty rate paid by petrol car drivers.
The new mileage-based tax is set at 3p per mile initially and will increase annually with inflation. The OBR estimates this measure will raise £1.4 billion for the treasury.
However, the government is also backing electric vehicle adoption with a substantial £1.5 billion funding package. This includes approximately £1.3 billion in additional funding for the Electric Car Grant, building on an existing £650 million investment, plus £200 million dedicated to expanding the UK's charging infrastructure network.
Support for Conventional Drivers
In welcome news for petrol and diesel vehicle owners, Rachel Reeves announced an extension to the fuel duty freeze until September 2026. The current rate of 52.95p per litre for standard petrol and diesel has been frozen since 2011, when a 5p reduction was introduced.
The Chancellor also confirmed the introduction of a new Fuel Finder scheme designed to help drivers locate the cheapest fuel in their area. "I am bringing in new rules to mandate petrol forecourts to share real-time price rises through a new Fuel Finder," Reeves told Parliament.
This initiative, which was initially confirmed in last year's Autumn Budget, is expected to save the average household around £40 annually by increasing competition and transparency in fuel pricing.
Industry Reaction and Additional Measures
Motor industry leaders have expressed mixed reactions to the budget announcements. Matt Galvin, Managing Director of Polestar UK, welcomed the increase in the Expensive Car Supplement threshold but emphasised the need for rapid implementation of charging infrastructure.
"We're pleased to see progress on raising the Expensive Car Supplement threshold," Galvin commented. "Support for private retail customers is essential to drive EV adoption. While it's positive to hear another £200m will be invested in charging infrastructure, we now need to see that funding translated into rapid delivery on the ground."
The threshold for the Expensive Car Supplement will increase from £40,000 to £50,000 in April 2026, a move that will cost the treasury an estimated £500 million in 2030-2031. This charge is applied to motorists for five years after a vehicle is first registered.
Meanwhile, Mike Thompson from Leasing Options expressed concerns about the potential impact of the pay-per-mile scheme on electric vehicle adoption. "Rumours of a proposed 'pay per mile' scheme expected to feature in the upcoming Budget could have the opposite effect, adding hundreds of pounds to the annual running costs of an EV," he warned.
The budget also included reforms to the Motability scheme, with Reeves stating: "The Motability scheme was set up to protect the most vulnerable, not to subsidise the lease on a Mercedes Benz." The changes will remove luxury vehicles from the scheme and reduce taxpayer subsidies, returning the program to its original purpose of providing cost-effective leases to disabled people.
These six key measures represent the most significant changes for UK drivers in recent years, balancing support for traditional motorists with incentives and new charging structures for the transition to electric vehicles.
