Key things to look out for in the Autumn Budget 2026
Thursday 22nd October 2026
Last updated: 22nd October 2026
Key things to look out for in the Autumn Budget 2026
When John Healey gets to his feet on 28 October, he will do so as the fifth Chancellor in just four years. And much like his predecessors, he is facing a raft of economic challenges, many of which are without clear or easy answers to silence the critics...
Published: 21st October 2026
Read time: 7 minutes
A challenging fiscal landscape
The economy has grown by just over 4% in the four years to June 2026. That’s the equivalent of around 1% a year, placing the UK fourth among the G7 economies, behind the US, Canada and France, but ahead of Italy, Japan and Germany.
More recently, the UK has risen to become the fastest-growing G7 economy in the first half of 2026, but KPMG now estimates that the Chancellor’s fiscal headroom, the buffer against breaching the government’s self-imposed fiscal rules, could fall from Office for Budget Responsibility’s (OBR) March prediction of £23.6bn to around £12bn. Add in Consumer Prices Index (CPI) inflation that remains stubbornly above the Bank of England’s target of 2% and it’s clear that the Chancellor is under pressure to reduce spending and/or increase taxes, neither of which is likely to be easy, quick or popular.
With this in mind, let’s take a look at the key issues affecting fleet operators and what the Chancellor may, or may not, include in Budget 2026.
Fuel Duty to be frozen…again?
One of the hottest topics is, of course, the price of fuel. Diesel recently hit an all-time high of 200.04p per litre, while petrol reached 175.28p, its highest average pump price since the fuel crisis of 2022.
There hasn’t been a rise in fuel duty since 2011 and Mr Healey’s predecessor, Rachel Reeves, postponed the increases planned for September and December, leaving a 3p rise scheduled for January 2027 and a further 2p in March. The fuel duty freeze has already cost the government well over £120bn since it was first introduced in 2011 and a rise is almost inevitable once economically and politically viable, but this is unlikely to be the time to do it.
Of course, vehicles that use the most fuel feel the most pain and so for commercial vehicle operators where routes or applications make electrification extremely difficult, if not impossible at this point, the cost of fuel is a very real threat to business continuity. Unsurprisingly, the Road Haulage Association (RHA) has been lobbying hard for targeted relief for lorry, coach and van operators and additional government support to encourage the use of low-carbon fuels such as HVO (Hydrotreated Vegetable Oil).
Benefit-in-Kind freeze for electric cars?
With Benefit-in-Kind (BiK) rates only published up until 2029/30, drivers entering a four-year lease currently have no clear indication of the amount of tax due in the final year. There is also the thorny issue of BEV BiK which is set to rise to 9% in 2029 compared with 19% for PHEVs and 20% for the cleanest ICE vehicles.
To support the growing transition to electric vehicles, the BVRLA has called for the 9% rate to stay for a further two years and an end to the current uncertainty in relation to ZEV Mandate rules and timing.
A major change to ZEV mandate targets?
Battery electric cars accounted for 28.3% of September registrations, with PHEVs recording a 17% share. Whilst the growth in registrations is encouraging, a year-to-date market share of 26.2% is still well below the 33% mandate target for 2026.
For vans, it’s an even more challenging scenario with BEVs predicted to account for just 11.5% of registrations in 2026 against a target of 24%, and 15.9% in 2027 when the target rises to 34%.
There is no easy answer, especially when there are competing priorities. The business department has reportedly asked for the 2030 battery electric car target to be cut from 80% to just 50%. The aim is to support manufacturers facing intense price competition from newer market entrants. However, the Department for Energy Security and Net Zero (DESNZ) is concerned about the impact such a move would have on the UK’s ability to meet its climate targets and commitments.
The government is reportedly considering a compromise of 60% for cars, with the balance made up of plug-in and self-charging hybrids. And of course, any reduction in the car target would increase pressure to do likewise for vans.
The government’s joint consultation on the Zero Emission Vehicle (ZEV) Mandate and the Vehicle Emissions Trading Schemes (VETS) Order remains open until 23 October, with a review to be completed by early 2027. However, Mr Healey’s speech may well provide an indication of the government’s future intentions.
BiK on used EVs based on 35% of original list price?
Despite potentially substantial depreciation, used electric company cars are currently taxed based on their original list price. The BVRLA has argued that this is both unfair and counterproductive and that BiK for electric cars aged three years or more should be calculated using 35% of their original list price.
A change is perhaps unlikely in the short term, but it’s a move that could make used company cars and used-EV salary sacrifice more attractive, widen employee eligibility, support demand for vehicles coming off their first lease and as a result drive higher residual values and potentially lower new-car leasing costs.
A new 5% VAT rate for public charging?
The BVRLA, chargepoint operators and consumer groups have long called for the government to remove the VAT disparity between home and public charging. As things stand, charging on the road incurs a sizeable premium, with average PAYG costs currently 54p/kWh when charging at speeds up to 49kW and 79p/kWh for rapid and ultra-rapid chargers (50kW+). This compares with home charging, which can cost as little as 6.66p/kWh for an overnight charge.
The government could narrow the gap by cutting VAT on public charging from 20% to 5%. It would certainly be popular, but far from cheap, with ZapMap estimating that the measure would cost £143m in 2027, rising to £315m in 2030.
However expensive it could turn out to be, the difference in VAT rates is seen by many as grossly unfair, particularly as it disproportionately impacts drivers on lower incomes and those living in densely populated areas with no feasible way of installing a chargepoint at or near where they live.
100% tax relief for new electric cars and chargepoints extension?
The existing 100% first-year allowances for qualifying new zero-emission cars and EV chargepoints are due to expire on 31 March 2027 for corporation tax and 5 April 2027 for income tax paid by sole traders and individual partners.
For businesses purchasing qualifying electric cars and EV chargepoints, the ability to deduct 100% of expenditure from taxable profits is a key driver in boosting investment and any reduction to the current rate is likely to be highly unpopular with fleet operators looking to drive increased adoption of battery electric vehicles.
New tariffs for Chinese car manufacturers
Currently, the UK applies a 10% import duty on cars imported from China, with no additional China-specific levy. By contrast, the EU applies up to 35.3% on top of its standard 10% tariff for Chinese-built battery electric cars.
With the UK government seeking to be included in the EU’s proposed Industrial Accelerator Act, which includes a ‘Made in Europe’ policy with strict rules about the origin of vehicles and components in order to qualify for tax subsidies, incentives and public procurement, a closer alignment on tariffs is entirely possible.
On the other hand, while an increase in tariffs could protect established car manufacturers in the UK, it would likely mean a substantial increase in the cost of increasingly popular brands such as BYD and Geely, hitting consumers and businesses at a time when motoring and business operational costs are still on the rise.
Is pay-per-mile eVED still set for April 2028?
Budget 2025 included a new pay-per-mile eVED for electric car drivers that would see BEV and Hydrogen Fuel Cell Electric Vehicle drivers charged at 3p per mile, while PHEV drivers would pay 1.5p per mile for every mile driven.
The government has thus far indicated that the change is scheduled to take effect from April 2028, but the Association of Fleet Professionals (AFP) is calling for implementation to be delayed until at least 2030. The rationale being that this would allow the electric car market more time to mature and stabilise. It has also warned of the substantial administrative burden that mileage reporting, payments and compliance could place on fleet operators.
The government has already agreed to simplify certain aspects of the scheme and cars under three years old will no longer need additional mileage checks before their first MOT, while fleets will be able to use estimated mileage readings and benefit from bulk licensing and more flexible payment arrangements.
The Budget could provide an opportunity for ministers to reconsider the launch date or offer further concessions, and the Treasury has committed to providing additional updates by the end of 2026.
Depot Charging Scheme window to open on Budget Day
The next Depot Charging Scheme application window is expected to open on 28 October and run until 29 January 2027, for projects being delivered during 2027/28.
The previous window covered 70% of eligible chargepoint and civil costs, capped at £1 million per organisation, but there has been no announcement on the terms of the next window.
New AMAP rates to be announced
Approved Mileage Allowance Payments (AMAP) rates have already been increased from 45p to 55p for the first 10,000 business miles, retrospectively from 6 April 2026, with the rate above this level remaining at 25p per mile.
The government has confirmed that it will set out its plans for 2027/28 and beyond as part of this year’s Budget. This could mean that the recent increase will be maintained for at least another year or, given the escalating cost of fuel, a further change could be on the cards.
A Final Word
A challenging economic climate means that tough decisions need to be made, but a new prime minister and chancellor mean there could also be some surprises in store for fleet operators and drivers.
Whatever happens, you can be sure we’ll carefully analyse the Budget’s impact and provide the insights and advice you need to make the right decisions at the right time.