What might drivers expect in the 2025 Autumn Budget?

The Autumn Budget is the UK government’s big yearly update on money matters. Delivered by the Chancellor of the Exchequer, it explains how taxes, public spending, and borrowing will be handled in the year ahead. It’s done so the public knows what to expect and to ensure the state finances remain balanced.

For drivers, the Autumn Budget is the moment to see any changes that could affect road costs, taxes, and other motoring expenses.

When is the budget?

Labour chancellor Rachel Reeves is set to deliver this year’s Autumn Budget at around 12:30pm GMT on Wednesday 26 November. You’ll be able to hear the statement on major news outlets such as the BBC and on the official GOV.UK website.

So, what car-related changes could be on the horizon? The rumours are already flying – and we’re here to take a look.

Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.

Fuel duty rises: could the freeze finally end?

Fuel duty has been frozen since 2011, and the 5p-per-litre cut from 2022 is still in place until March 2026. But with fuel prices steady and inflation cooling, the Chancellor might decide it’s time for a small rise – maybe 1p or 2p per litre.

Any increase would be politically tricky, so if it happens, expect something modest and phased in rather than a big jump. The likelihood of this happening is low, though.

Could salary sacrifice for EVs be targeted?

Salary sacrifice schemes have made electric cars more affordable by letting employees pay through pre-tax salary. But after recent crackdowns on other car ownership tax breaks, there’s some chatter that EV schemes might come under review too.

A full ban looks unlikely – the government still wants people to drive electric, and has its Electric Car Grant (ECG) to back this. But we might see tighter rules or limits on how much tax can be saved.

Road pricing: the pay-per-mile idea

As more people switch to electric cars, the government collects less from fuel and road taxes. With less revenue to fund roads and transport, future budgets may need to find new ways to fill the gap.

So, with EVs on the rise and fuel duty revenues falling, the government will eventually need a new way to tax road use. One idea being floated around is a pay-per-mile charge, where drivers are taxed based on how far (and possibly what) they drive.

Don’t expect it this year, but it’s definitely part of the long-term plan.

Benefit-in-Kind (BiK) rates for EVs

The BiK rate for company EVs is set to rise gradually from 2% now to 5% by 2027/28. The chancellor could confirm or tweak this schedule to give businesses more certainty, or to raise a little extra tax from pricier models.

Any change here would probably be small and steady rather than a shock increase.

A quiet review on classic car VED exemption

Cars over 40 years old currently pay no Vehicle Excise Duty (VED). There’s a small chance the government could review this exemption to make the system “fairer,” though it would mainly affect a niche group of enthusiasts.

Tax on EV charging to level the playing field

Another area to keep an eye on is how electricity for EVs is taxed. Home charging currently attracts 5% VAT, while public charging is hit with 20%. The government might bring these closer together or add a small charge for rapid public chargers. This would help recover some of the revenue lost from falling fuel duty.

So, expect tweaks from the budget, not shocks

Overall, big changes for drivers look unlikely this year. But a small fuel duty rise, minor EV tax tweaks, or changes to charging VAT all feel possible.

The real shake-up, such as a pay-per-mile tax, is probably a few years away. Still, the direction is clear: as more people go electric, the Treasury is looking for new ways to keep the money rolling in.

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