The Autumn Budget 2025: What Fleet Operators NEED to Know
Written by
Thursday 13th November 2025
Last updated: 8th December 2025
This year’s Autumn Budget arrived with a sense of inevitability. Expectations had already been shaped by weeks of briefings and off-the-record hints about tough choices, tight fiscal rules and limited room to manoeuvre.
Last time round, having announced £40 billion of tax rises, the Chancellor called it a Budget that she didn’t want to repeat and we were assured that it would “wipe the slate clean” and unlock a platform for future growth. Now, just over a year later, it’s clear that the required growth simply hasn’t materialised, narrowing Rachel Reeves’ options as she attempts to kick-start the economy.
Contents
The fiscal landscape
The first quarter of 2025 delivered a modest rebound, with GDP rising 0.7% compared to the last quarter of 2024. However, the Office for Budget Responsibility (OBR) dampened enthusiasm by reporting that this was partly driven by the ‘temporary frontloading of property transactions and exports’. In essence, export activity increased as businesses sought to avoid tariff increases and house buyers pushed through purchases ahead of stamp duty going up in April. As things settled down, growth fell to 0.3% in the second quarter and is provisionally estimated at 0.1% in the third.
Meanwhile, inflation remains stubbornly high, with consumer prices rising at rates well above the 2% target set by the Bank of England. In fact, the latest forecasts indicate 2025 will average out at 3.5% which, for context, is 0.9 percentage points above the advanced economies. Bearing all of this in mind, the logical question to ask is how much the government has to fund the public services we rely on and the investment needed to fuel future growth.
The amount of leeway between what the government brings in through taxation and spends delivering public services, otherwise known as fiscal headroom, will grow to £21.7 billion by 2029–30. However, we should remember that in 2024 the way that government calculates debt was redefined from Public Sector Net Debt to the much broader Public Sector Net Financial Liabilities measure. This change increases the value of assets counted on the government’s balance sheet and therefore boosts the apparent headroom. Whether that is reasonable or not is a matter of opinion, but the reality is that sluggish growth, higher borrowing costs and persistent inflation continue to place tight limits on what the Chancellor can deliver.
Against this backdrop, Budget 2025 was always going to involve some difficult decisions. And while much of the public attention has fallen on household bills and social spending, there are important implications for fleet operators and the wider mobility sector.
Here’s a clear rundown of the changes that matter most to businesses running cars, vans and mobility services, and what they could mean for your fleet strategy over the coming years.
Paulo Larkman, Head of Fleet Consultancy, Novuna Vehicle Solutions
EV and PHEV drivers to pay for every mile driven
For fleet operators and drivers, the headline announcement was undoubtedly the new electric Vehicle Excise Duty (eVED) which in real terms means the introduction of a new mileage-based tax for electric and plug-in hybrid cars.
It’s a big change but one that was always going to happen at some stage. In 2025-26, fuel duties are expected to raise £24.4 billion for the government. To put this figure into context, this equates to around £850 per household. And that’s before VAT is added at 20%.
Whichever way we look at it, it’s a sizeable amount of money; enough to run the entire NHS for around 2 months. Perhaps of more relevance is the fact that the revenue earned is more or less enough to cover the entire cost of Britain’s road and railway system.
Although the money brought in by fuel duty isn’t entirely ringfenced for transport spending, it only seems fair to share the cost equally across petrol, diesel, EV and PHEV drivers. In any case, with fuel duty revenues set to halve to around £12bn by the 2030s, something has to be done to plug the predicted gap.
The Chancellor’s solution is to levy a pence per mile charge of 3p for electric vehicles and 1.5p for PHEVs. And it’s the latter that’s the more surprising and, for some, difficult to accept measure. While some newer PHEVs have a WLTP electric-only range of 50-70 miles, many languish between 30 to 50 miles. Depending on the type of miles driven, this could lead to a situation where 90% of miles are driven using petrol on which fuel duty has already been paid, but a 1.5p per mile charge remains payable based on every mile driven, not just the electric ones.
Jon Lawes, Managing Director, Novuna Vehicle Solutions
The charge is set to come in from April 2028 and will be uprated each year in line with CPI (Consumer Price Index) and a public consultation is set to be concluded by 18 March 2026. Two of the biggest issues for debate will be that of enforcement and fairness. For example, while an MOT test can be used to verify mileage, newer vehicles would have to self-declare or, perhaps, have their mileage verified at each service. In theory, fleet operators could look to integrate mileage data from telematics systems with tax reporting structures, but that’s still a long way from being an easy fix. There’s also the question of driver resistance to being tracked by the government or their employer. In reality, all of these solutions have obvious drawbacks and limitations, and we will need to wait a while yet to see how things will work in practice.
For the sake of clarity, it’s worth noting that vans, buses, coaches, motorcycles and HGVs are out of scope at this stage, and VED for ICE vehicles has simply been uprated in line with RPI from 1 April 2026.
Fuel Duty frozen until September 2026
Given the shortfall in the government’s coffers, it seems remarkable that we have been paying the same main rate of fuel duty for the last 14 years. By the time the rate rises, the freeze will have cost the government around £120bn, which amounts to nearly five years’ worth of fuel duty given away.
There’s no doubt that any increase from the current rate of 57.95p per litre would be deeply unpopular, but it would have been less surprising had the ‘temporary’ reduction of 5p per litre, which keeps the true rate at 52.95p, been removed. Instead, the Chancellor has opted to gradually increase the rate by 1p from September 1, 2026, 2p from December 1, 2026, and 2p from March 1, 2027. It’s difficult to argue against, but it’s still another cost for fleet operators to factor in and, given the incoming pence per mile charge for EVs and PHEVs, it adds another layer of complexity in total cost of ownership calculations.
The government also confirmed that the Department for Energy Security and Net Zero’s Fuel Finder scheme, designed to create more competition among fuel retailers, will go live in Spring 2026, with analysis suggesting it could lead to savings of around £40 per year for the average household, rising to £89 per year if we factor in the extended 5p fuel duty cut.
Expensive Car Supplement threshold rises to £50,000 for EVs
The Expensive Car Supplement (ECS) was first introduced in 2017 and initially applied to all ICE vehicles with an official list price of over £40,000, including optional extras. The primary objective of the tax is to ensure that owners of higher-value vehicles make a fair financial contribution to the public services and infrastructure they use.
The surcharge is set to increase from £410 to £425 in April 2026 and continues to apply for five years from the second licence onward. EVs were added to the system earlier this year, although the government has since acknowledged that their typically higher list prices mean electric car drivers are disproportionately affected.
To redress the balance and to avoid unnecessary, perceived or otherwise, financial barriers to EV adoption, the ECS threshold for EVs is set to increase to £50,000. With the average EV costing around £46,000, it’s a move that will please many drivers wanting to make the switch. Of course, some will argue that there are still a significant number of EVs that sit above the new threshold, but the government’s view appears to be that these vehicles fall into the luxury car bracket initially targeted by the ECS.
Jon Lawes, Managing Director, Novuna Vehicle Solutions
The updated rules will apply retrospectively, which means that the majority of electric vehicles first registered from 1 April 2025 will no longer have to pay the charge. Vehicles renewing their licence before 1 April 2026 will only need to pay it for a single year.
A separate legislative update confirms that any licence starting on or after 1 April 2026 will use the higher threshold, even if the application was made earlier.
Tax easement for PHEV drivers
As part of ongoing efforts to bring published emissions figures closer to real-world usage, updated rules came into force on 1 January 2025 that significantly extended the length of vehicle emissions tests. Previously, vehicles were measured over a distance of 497 miles. However, the International Council on Clean Transportation (ICCT) felt that this created a Utility Factor (UF) curve that fails to accurately ‘reflect the real usage of PHEVs’ and creates official CO₂ emissions figures which are unrepresentatively low. As a result, test distances have already been tripled to 1,367 miles and there are plans to extend it again to 2,650 miles within the next two years.
Initially, the longer tests applied solely to vehicles launched from 1 January 2025, but this will be extended to all models on sale from 31 December 2025, with company car tax calculations based on the figures recorded at the point of production.
Accurate emission tests are clearly good for the environment, and they also help drivers choose a vehicle that’s right for them, but PHEV users need to be aware that more test miles mean more ICE miles, and that can lead to a higher CO2 band for Benefit in Kind.
Having recognised the potentially adverse effect on plug-in hybrids, the government has sought to ease the pain by introducing a tax easement measure that will retrospectively run from 1 January 2025 to 5 April 2028, during which time the CO₂ emissions figure will be deemed to be a nominal value of 1 for BiK purposes.
To qualify, vehicles capable of any number of electric-only miles must also be:
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- First registered on or after 1 January 2025
- Have an official CO2 rating of 51g/km or more.
- Not be registered under the new Euro 6d-ISC-FCM or Euro 6e
- First registered on or after 1 January 2025
Electric Car Grant extended and expanded
In July, we saw the introduction of the Electric Car Grant (ECG) with a starting pot of £650m earmarked to combat the higher upfront costs of EVs. There are two levels of grant available based on battery range, vehicle size or type (supermini vs family car / SUV etc.) and price. To be eligible for a grant, the vehicle must be:
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- An M1 passenger vehicle
- Produce 0g/km CO2 at the tailpipe
- Have a minimum battery range of 100 miles (160km)
- Come with a 3-year or 60,000-mile warranty, whichever is reached first
- Powered by a battery with an 8-year or 100,000-mile warranty, whichever is reached first
- Meet minimum sustainability criteria)
There are now 28 models currently eligible for the scheme, but only four of these are in the highest band and therefore eligible for the maximum £3,750 grant.
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- Citroën ë-C5 Aircross Long Range
- Ford E-Tourneo Courier
- Ford Puma Gen-E
- Nissan LEAF
The remaining 24 qualify for the reduced grant level of just £1,500, which many argue falls a long way short of bridging the gap between ICE and EV pricing. That said, the growing number of lower priced EVs from new market entrants is helping to provide would-be switchers with more choice and affordability.
To date, 35,000 grants have been paid out, and the government has committed an additional £1.3bn of funding and extended the scheme until 2029/30.
Cross-pavement EV charging
Nationwide research shows that 18 million households have, or could have, off-street parking. On the face of it, this leaves almost 10 million households fully reliant on the public charging infrastructure, but in reality, the figure is far higher than it first appears, primarily because private parking and the ability to install a chargepoint on that space are two entirely different things.
With the average pay-as-you-go price of public charging anywhere between 53p and 76p per kWh, and the best home-charging tariffs around 85-90% lower at 7p per kWh, the government clearly needs to make it easier and cheaper for drivers without a driveway to charge their EVs at home.
One of the biggest barriers is, unsurprisingly, planning rules, and a public consultation has been launched to explore changes to Permitted Development Rights (PDRs) that would make it easier to install cross-pavement solutions and associated domestic charge points. It will also cover the installation of multiple units of equipment housing or storage units for electric vehicle charge points in non-domestic, off-street car parks. The consultation is live now and will close on 21 January 2026.
Review of public EV charging costs
Charging on the road can often cost seven and a half times as much as charging at home. For many would-be EV drivers without the space or power connection for a residential charger, this represents a very real barrier to moving away from petrol or diesel cars.
With this in mind, the government plans to review the cost of public EV charging, looking at the impact of energy prices and other influences, and explore a range of options for reducing these costs. The review will begin in early 2026 and conclude later that year.
£200m additional investment in charging infrastructure
The UK charging network continues to grow and we are rapidly approaching the 90,000 chargepoint mark. This equates to roughly one chargepoint for every 16 electric cars and there’s already a choice of 44,000 charging locations, compared to just 8,400 petrol stations.
That’s the good news. The reality is that while we are clearly heading in the right direction, the picture varies wildly across the country and only c.20% of charge points are capable of rapid or ultra-rapid charging.
To continue the push for a world-leading, or at least fit-for-purpose, public charging infrastructure, the government has now committed an additional £100m to support the installation of new home and workplace charge points. This new funding allocation is on top of the £400m announced in the June Spending Review and there is also a further £100m for local authorities to fund the training and deployment of specialist staff.
First-year allowances and business rate relief
The 100% first-year allowance for zero-emission vehicles, which was due to run out on 31 March 2026, has now been extended for a further twelve months. The same will also apply to first year allowances for charge points.
EV chargepoints already qualify for business rates relief, but the government is extending this support with a new 10-year, 100% relief for eligible chargepoints and EV-only forecourts. In simple terms, this will apply to public or commercial EV chargepoints that are separately assessed for business rates by the Valuation Office Agency. These include workplace, depot, public and forecourt chargers, but not domestic home chargers.
It's a move that gives businesses additional long-term certainty over running costs and should help accelerate the rollout of private and public charging infrastructure.
£1.5bn for Drive35 programme
Earlier this year, the government announced a £2.5bn ten-year investment programme to further support the UK’s transition to zero-emission vehicles. The initiative, known as DRIVE35, provides funding support for everything from building new gigafactories and fuel cell developments to hydrogen storage and management systems.
The Chancellor has now strengthened this commitment with an additional £1.5bn to support new zero-emission vehicle manufacturing capacity, battery supply chains and wider clean energy projects that the government views as essential to maintaining competitiveness. The extra investment is intended to ensure the sector has the long-term certainty it needs to scale up production, safeguard skilled jobs and anchor more of the EV value chain in the UK.
Employee Car Ownership Schemes changes pushed back to 2030
Autumn Budget 2024 included a commitment to close what the government saw as a series of loopholes that allowed an employer or third party to sell a car to an employee, often via a loan with no set repayment terms and negligible interest, and then buy it back after a short period. Under such circumstances, no company car tax is paid, costing the Treasury well over £200 million a year.
Changes were due to come into force in 2026, but this has now been pushed back to April 2030, with transitional arrangements for anyone still using an ECOS agreement when the new rules come into force. These arrangements will run for two years, allowing existing agreements to continue under the current tax treatment until they are changed, renewed, or until 6 April 2032, whichever comes first.
Road improvements and local transport investment
Rachel Reeves has restated the government’s existing commitment to increase local road maintenance funding to more than £2 billion a year by 2029–30, doubling the amount earmarked for pothole repair and resurfacing in this Parliament. This was originally announced last year but has been highlighted again as part of the government’s wider infrastructure narrative.
What's next?
As you would expect, we’re already analysing what these changes mean for our customers, from funding strategies and whole-life costs to infrastructure planning and policy development. To talk to us about how we can help your business design and deliver a fleet strategy that perfectly balances operational necessity with cost and carbon efficiency, just get in touch.