Chancellor Rachel Reeves released the Autumn Budget, outlining the significant measures for fleets and motorists compared with previous years. The statement includes major policy changes such as the 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 period of consultation.
A 3 pence-per-mile (ppm) rate on battery-electric cars and 1.5 ppm for plug-in hybrid cars is 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 confirmed 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, after which the rates will increase by 1p from September 1st 2026, 2p from December 2026, and another 2p from March 2025.
Salary Sacrifice
Chancellor Reeves introduced a £2,000 cap on salary sacrifice into pension contributions. Therefore, as of April 2029, pension contributions above this threshold will no longer be exempt from National Insurance Contributions.
Employee Car Ownership
In the Autumn Budget of 2024, it was announced that the 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 transitional arrangements until April 2031, to allow more time for the sector to prepare and adapt to this change.
This Autumn Budget announced significant developments that will continue to shape the fleet industry, as new taxation of EVs could pose many implications regarding fleet costs and the switch to EVs. 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 (Opens in new window) website.