Chancellor Rachel Reeves, released Autumn Budget outlining the significant budget for fleets and motorists compared with previous years. The statement includes major policy changes such as taxation of electric vehicles (EVs) and action on Fuel Duty, which we have outlined below:
Electric Vehicles:
- Reeves confirmed the introduction of the new tax on EVs, the Electric Vehicle Excise Duty (eVED).
- EVs will also face new mileage based charges on top of existing Vehicle Excise Duty (VED) rates. This new tax will be introduced after a perod of consultation.
- A 3 pence per mile (ppm) rate on battery electric cars and 1.5ppm for plug-in hybrid cars are to be imposed from April 2028. These rates will then increase annually in line with the Consumer Prices Index (CPI) measure of inflation.
Fuel Duty
- Chancellor Reeves concfirmed that Fuel Duty will not increase in line with inflation in April 2026.
- However, Reeves is working to undo the temporary 5p cut that was introduced back in March 2022. This cut will remain in place until August 2025, at which the rates will increase by 1p from September 1st 2026, 2p fom December 2026 and another 2p from March 2025.
Salary Sacrfice
- Chancellor reeves introduced a £2000 cap on salary sacrifice into a pension contributions. Therefore, as of April 2029 pension contributions above this threshold will no longer be exempt from National Insurance Cotntributions.
Employee car ownership
In the Autumn Budget of 2024, it was announced that he Employee Car Ownership Schemes (ECOS) would be brought under the Company Car Tax regime from April 2026. However, Reeves announced that the implementation will be delayed to April 2040, with transitioning arrangements until April 2031, to allow more time for the sector to prepare and adapt to this change.
This Autumn Budged announced significant developments that will continue to shape the fleet industry, as new taxation of EVs could pose many implication regarding fleet costs and the switch to EV. For more insights on the Autumn Budget, have a quick read of our review.
Additionally, to read the full Autumn Budget, visit the GOV UK website. (Opens in new window)