Autumn Budget 2025: Four major changes things drivers need to know

Rachel Reeves’ Autumn Budget has been one of the most significant for motorists in years. The biggest changes for drivers include the introduction of pay-per-mile road charges for the first time, further investment in charging infrastructure and changes to the Motability car scheme.

Here’s the key things drivers need to know.

1. Pay per mile tax for EVs and PHEVs from 2028

Drivers of EVs and plug-in hybrids will be subject to a pay per mile charge from 2028, Reeves confirmed. In what’s arguably the most controversial element of the Budget for motorists, it means that drivers of EVs will pay 3p per mile, while PHEV drivers will be charged 1.5p per mile.

This means an EV driver travelling 10,000 per year will be subject to a tax bill of £300. The charge will be added to existing VED for new EVs, which currently stands at £195 per annum. Reeves commented: “This will be payable each year alongside vehicle excise duty at 3p per mile for EVs and 1.5p for plug-in hybrids”.

Commenting on the change, Edmund King, president of the AA, said: “The Budget has put drivers at a fork in the road with the chancellor announcing major tax proposals for EV drivers.

“Drivers fully understand the government needs to get the balance right between raising cash for road investment, whilst ensuring it doesn’t slow down the transition to electric cars in order to meet environment targets”.

The aim is to make things fairer for drivers, with the government pointing out that fuel duty covers petrol and diesel cars, but until now there has been no equivalent for electric vehicles.

2. Fuel duty remains frozen

The Chancellor confirmed fuel duty remains frozen, until at least September 2026. It could then be subject to a staggered increase from this date. The freeze saves drivers of petrol and diesel cars around £3 per tank.

RAC head of policy Simon Williams commented: “Drivers will be relieved the Chancellor has decided to keep the 5p cut in place for now. […] But this relief will be very short-lived given the staggered increase from next September.”

3. No luxury cars on the Motability scheme

Disabled people who lease cars via Motability will no longer have the choice of premium brands like BMWs and Mercedes. The change comes in with immediate effect, and is part of an effort by the Chancellor to ensure at least half of Motability cars are British-built by 2035.

The full list of excluded brands include: Mercedes, BMW, Audi, Alfa Romeo and Lexus. Motability aims for 25% of its cars on the scheme to be UK-built by 2030 – a four-fold increase from the current amount of British built vehicles it supplies.

4. More investment in the Electric Car Grant and charging infrastructure

Reeves unveiled an extra £1.3bn in extra funding for the Electric Car Grant scheme, which launched back in July. It has been designed to help boost EV numbers, and the government claims it’s already assisted 35,000 consumers switching to an EV.

More money has also been made available to accelerate creation of more charging points, and a consultation is under way to see what the best way of helping people without driveways charge EVs.

With all new cars set to be electric or hybrid from 2030, there is still some way to go – 23.8% of new car registrations in September were for fully electric vehicles. Reeves will hope the additional funding for chargers and grants will help accelerate the transition.