Chancellor’s Budget 2025 – What it means for drivers

The Autumn Budget 2025 is just around the corner, and while it’s the topic of conversation for nearly all Brits, UK drivers are keeping a close eye on it, too.

From potential fuel duty rises to changes for electric vehicle (EV) owners, the Chancellor’s announcements could have a real impact on your wallet and your daily drives.

Let’s take a look at what to expect and how it might affect you.

When is the Autumn Budget?

Labour Chancellor Rachel Reeves is set to deliver the Autumn Budget on Wednesday, 26 November 2025, at around 12:30pm GMT.

You’ll be able to follow the statement on major news outlets like the BBC or check the official GOV.UK website.

Will the Autumn Budget affect drivers?

In short, yes. Until the Budget is delivered, we can’t say 100% for sure. However, we do have a good idea of how it will affect most vehicle owners.

While some changes may be minor tweaks, others could influence the running costs of your car, the incentives for going electric, and even the Motability scheme.

Whether you drive petrol, diesel, hybrid, or EV, there are a few key things to watch out for, including the following…

1. Potential impact of a pay-per-mile tax for EVs

One of the biggest rumours swirling ahead of the Budget is a pay-per-mile road tax for EV owners.

The proposed charge is 3p per mile, which would cost the average EV driver around £250 a year. In comparison, petrol and diesel drivers currently pay about £600 in fuel duty each year.

Hybrid owners are expected to pay a lower rate, though the details haven’t been confirmed yet. How exactly the mileage would be tracked is unclear – it could involve black-box telematics (similar to some car insurance policies) or reporting via your annual MOT.

The government states that this move is about fairness. With fuel duty revenues falling as more drivers switch to electric, a pay-per-mile tax is seen as a way to plug the financial gap.

If the scheme goes ahead, it won’t be implemented until 2028, giving drivers time to prepare — and don’t worry, Bumper will be providing updates along the way.

The takeaway is that, with 1.6 million EVs already on UK roads (and the motor industry predicting 6 million by 2028), this measure could become standard for running an EV in the UK.

2. EV salary sacrifice changes

Could an EV be in your future? Salary sacrifice schemes have made electric cars more affordable for employees, letting them pay through pre-tax salary.

There’s talk that the Chancellor could tighten these rules or place limits on how much tax can be saved in the Autumn Budget.

A full ban seems unlikely, as the government still wants people to switch to electric vehicles. However, if you rely on these schemes, it’s worth keeping an eye on any updates after the Budget.

3. Fuel duty rises

Fuel duty has been frozen at 52.95p per litre since 2022, with the 5p-per-litre cut from that year still in place until March 2026.

Now that fuel prices are relatively stable and inflation is easing, the Chancellor could allow this cut to expire, and this could lead to higher pump prices. Drivers might see a small rise, perhaps 1p or 2p per litre, rather than a large jump.

While it’s unlikely to break the bank, it’s still worth factoring in when budgeting for fuel costs.

4. Pay-per-mile longer-term plan

Beyond the EV changes, the government is also exploring a pay-per-mile system for all drivers.

In theory, this would tax motorists based on how far they drive – and possibly what type of car they own.

While this is more of a long-term plan than an immediate change, it reflects the government’s approach to road funding in a world where fewer cars use petrol or diesel.

Keep it in mind if you drive regularly, especially if you have a high-mileage commute or are making future plans that may include one.

5. Tax on EV charging

Charging an EV currently has different VAT rates: 5% at home and 20% at public chargers.

The Chancellor might aim to bring these closer together, or even add a small charge for rapid public charging.

On the flip side, there’s speculation of a 0% VAT rate on domestic energy bills. If introduced, this could save households up to £86 a year and make home EV charging cheaper.

Overall, these tweaks could encourage more drivers to consider switching to electric.

6. Cuts to the Motability scheme

The Motability scheme supports around 815,000 users, letting people who receive qualifying benefits lease a car, scooter, or powered wheelchair.

The Budget could see changes such as removing tax breaks (currently exempting VAT and insurance premium tax) and slimming down the car options by restricting access to premium cars.

Charity groups warn this could make life harder for disabled people, particularly those who rely on PIP (Personal Independence Payment) and mobility schemes for independence.

If you or someone you know uses Motability, this is one of the most significant areas to watch in the Autumn Budget.

7. Classic car VED exemption review

Cars over 40 years old currently pay no Vehicle Excise Duty (VED). There’s a small chance the government could review this exemption with a view to making the system fairer.

While it’s mainly a niche concern for classic car enthusiasts, it’s worth noting if you own or plan to invest in a vintage vehicle.

8. Cycle to Work Scheme changes

The government is also considering limits to the Cycle to Work Scheme tax break.

This scheme encourages people to commute by bike, reducing carbon emissions and traffic congestion.

Any changes could make cycling a little less financially attractive, so regular users of the scheme should stay alert for announcements.

Other changes that may affect drivers’ personal and family finances

While not directly related to cars, some personal finance measures will impact household budgets.

These should also be kept in mind, as they have the potential to affect your finances for fuel costs or car repairs.

• Income tax —Income tax thresholds are likely to be frozen for two more years. No rises are expected this week, keeping things stable for most taxpayers. This comes after Ms Reeves reportedly pulled a U-turn on suspected tax raises.

• Two Child Benefit Cap — This cap could be scrapped, affecting families who currently have restricted Child Tax Credit or Universal Credit claims.

• Cash ISA limit — The current ISA limit may drop from £20,000 to £12,000 or £10,000, reducing tax-free savings potential.

• Pension perks — There may be limits on tax breaks for pension contributions.

• Minimum and living wage increases — The National Living Wage could rise to £12.55–£12.86 per hour, and the National Minimum Wage is also expected to increase.

• VAT — A potential rise hasn’t been ruled out, which could affect the price of goods and services, including motoring-related purchases. Keep this in mind if you plan to make a significant purchase in the near future.

Key takeaways from the Autumn Budget

All in all, though expected to make big waves, drivers probably won’t see any huge changes in this Autumn Budget.

Here are the main expected changes at a glance:

• Pay-per-mile tax for EVs, ~£250/year from 2028

• Slight fuel duty rise, 1–2p per litre

• Potential 0% VAT on home EV charging

• Motability scheme changes, fewer tax breaks

• Classic car VED exemption under review

• Tighter rules on EV salary sacrifice schemes

Small increases in fuel duty, minor updates to EV-related taxes, or tweaks to charging VAT are more likely. The more dramatic plans, such as a full pay-per-mile system, are still a few years away.

But one message is clear: as electric cars become more common, the government is looking for new ways to make road users contribute fairly.

Final Thoughts

Whether you’re reading this before the Autumn Budget or after, every UK driver should take note of the changes in order to better plan ahead. Even small adjustments can add up over time, so being prepared will help you navigate any new rules or costs.

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