The Autumn Budget 2025 confirmed that driving is going to get more expensive. Instead of a single increase, the Chancellor has set out several fuel duty changes and new charges for electric vehicles and company cars. Together, these measures will affect regular motorists, business fleets and employers who provide cars to staff.
Below is a summary of what is coming and when.
Fuel duty: staged increases
Fuel duty will not rise straight away. However, three increases have been scheduled:
- 1p per litre on 1 September 2026
- A further 2p per litre on 1 December 2026
- A final 2p per litre on 1 March 2027
Each step is small on its own. Yet the combined effect will push up running costs for private drivers and for businesses that rely on cars, vans and lorries. These rises will sit on top of any changes in pump prices caused by global markets.
New mileage charge for electric vehicles
Electric vehicles are being brought more fully into the tax system.
From April 2028, a mileage-based Electric Vehicle Excise Duty (eVED) will apply to electric and plug-in hybrid cars. Drivers will pay this charge alongside normal Vehicle Excise Duty (VED):
- 3p per mile for fully electric vehicles
- 1.5p per mile for plug-in hybrids
For higher-mileage drivers, this will add a noticeable yearly cost. Even so, EVs will often remain cheaper to fuel than petrol or diesel cars.
VED supplement for expensive electric cars
There is also a change to the way VED applies to higher-value EVs.
From 1 April 2026, the threshold for the VED “expensive car” supplement for new electric vehicles will rise by £10,000, to £50,000.
More EVs will therefore fall below the supplement threshold. However, premium models with list prices above £50,000 will still attract the extra VED charge.
Company cars and benefit-in-kind rules
Many employees and directors use company cars, so changes to benefit-in-kind (BiK) rules are also important.
Planned BiK changes for employee car ownership schemes have been deferred until April 2030. Transitional arrangements will apply for contracts still running at that point so that tax bills do not jump overnight.
New emissions standards could also have increased BiK charges for some cars, especially plug-in hybrids. To ease this:
- A temporary easement applies from 1 January 2025 until 5 April 2028.
- It is designed to reduce higher BiK liabilities for plug-in hybrid company cars created by the new standards.
- Transitional arrangements will then run for certain vehicles until 5 April 2031.
This gives employers time to review fleet policies and decide how best to balance cost, tax efficiency and environmental goals.
Planning for higher motoring costs
Looked at together, these fuel duty changes and related measures point to a steady rise in motoring costs through the second half of the decade:
- Higher fuel duty for petrol and diesel vehicles
- New per-mile eVED charges for electric and plug-in hybrid cars
- Adjusted VED rules for more expensive EVs
- Shifting BiK treatment for company car drivers
If you run a business fleet, rely on vehicles for your trade, or provide company cars to staff, it makes sense to plan ahead. Reviewing vehicle choices, expected mileage, reimbursement policies and any car schemes can help manage the impact on your budget.
For a detailed breakdown of the Budget’s key components, you can view the full document here.