UK Autumn Budget 2025: What It Means for Drivers

On 26 November 2025, Chancellor Rachel Reeves delivered the Autumn Budget 2025 with a big promise to ease the cost of living.

For motorists, that seems to have been translated into a mix of short-term relief and signals about where driving costs are heading next (especially for EV users).

1. Fuel duty stays frozen (for now)

For petrol and diesel drivers fuel duty remains frozen at 52.95p per litre. That also keeps the long-running 5p-per-litre still in place.

What that means for motorists

• Short-term relief at the pump.
• But it’s not a permanent policy. The Budget documents outline a staged rise starting from September 2026.

If you’re looking at your budgeting for driving costs in 2026/27, it may be time to assume that your fuel costs will start creeping up again in late 2026.

2. New ‘pay-per-mile’ tax for EVs from 2028

One of the biggest shifts that was announced is the 3p-per-mile road-use charge on electric cars and 1.5p per-mile on plug-in hybrid cars. This is set to come into place in April 2028. 

This is designed to replace fuel-duty revenue, and the Office for Budget Responsibility (OBR) expects it to raise around £1.4bn a year.

What that means for drivers

• EV running costs go up, but not yet.
• High-mileage drivers will feel it most.

EVs remain cheaper to run than ICE cars, but the 'free road use' will be ending soon.

3. Road tax (VED) changes

This is not an entirely new 2025 announcement, but this year’s Budget has reinforced the Vehicle Excise Duty (VED).

What it means for drivers

• EVs lose their exemption from April 2025.
• Plug-in hybrids see a sharp first-year hike.
• New-car buyers should check the first-year VED band. It can add a chunky upfront cost .

So if you’re buying new, especially a PHEV, road tax is now a real part of the purchase cost.

4. Potholes & Roads

Motoring groups are already beginning to welcome the government’s renewed focus on road condition.

The Budget continues backing for road maintenance, after prior commitments to increase funding for repairs.

What that means for drivers

• If funding turns into resurfacing, tyres and suspensions could benefit.
• If it doesn’t, pothole damage remains one of the UK’s most common (and costly) motoring problems. Find out how to claim for pothole damage.

Even with more money promised, defensive driving and regular tyre checks stay essential.

5. ‘PumpWatch’ fuel-price transparency is coming

The Budget confirms the rollout of PumpWatch by the end of 2025.

This is a scheme requiring fuel retailers to publish live pump prices. Allowing drivers to compare via apps and sat-navs.

What drivers should do next

A few sensible steps to stay ahead of the changes:

1. Budget beyond the pump. Fuel duty is frozen now, but 2026 will see rises. Prepare for this.
2. If you’re switching to an EV, think 2028 and beyond. The pay-per-mile tax won’t totally remove the EV savings. However, it will reduce the gap.
3. Check your car tyres for efficiency. With motoring costs tightening, tyres maintenance is as important as ever. Some tyre tips include:

• Check air pressure and maintain this for improved fuel/energy economy,
• Check your tread depth
• Look into low rolling-resistance options. These can help cut running costs over time.

UK Budget and Motorists

The Autumn Budget 2025 gives drivers a breather today. Fuel duty is frozen yet again, and pump-price transparency is soon going to be released.

However, there are longer-term factors at play that we should all take into account:

• EV owners will start paying per mile from 2028.
• Hybrids lose their tax advantage.
• Fuel duty will rise again from late 2026.