The Autumn Budget 2026: What we know now and what happens next
Wednesday 4th November 2026
Last updated: 4th November 2026
The Autumn Budget 2026: What we know now and what happens next
Driven by an overall feeling that speculation around last year’s Budget was unnecessarily destabilising to the economy, John Healey was taking no chances this time round. So much so that the Budget was divided into ‘compartments’ with very limited access to each one and ministers were asked to sign a digital NDA committing them not to brief the media...
Published: 3 November 2026
Read time: 8 minutes
Introduction
The Budget was wide in scope, with plenty of tweaks but no dramatic changes that would risk a market shock. And in many ways, it worked. The market’s response was one of muted positivity, with the FTSE 100 opening up 0.25% on Thursday, after closing level on Wednesday evening.
Even the temporary increase in the Bank Corporation Tax Surcharge from 3% to 6% for 15 months from 1 January 2027 was greeted with a certain amount of relief and a feeling that it could have been worse. Markets like stability and while the Prime Minister has signalled that there will be more significant changes ahead, not least a closer relationship with Europe, it was a Budget designed to reassure, rather than excite, the markets and the country as a whole.
Economic overview
On the plus side, the UK economy has performed slightly better than expected, prompting the Office for Budget Responsibility (OBR) to raise its growth forecast for 2026 to 1.2%. However, growth is expected to slow to just 1% in 2027 before picking up again from 2028.
Higher energy prices and borrowing costs are already squeezing business and household budgets, with inflation forecast to peak at 3.8% early next year. Meanwhile, rising interest payments on government debt leave the Chancellor with little room to provide further support and stimulate growth.
For fleet operators, this all points to continued pressure on operating budgets and funding costs, making economic and policy stability essential for planning future fleet strategies and further investment in electrification. So, let’s take a look at what the Budget means for fleets and drivers in the months and years ahead.
No change to the ZEV Mandate… yet
With the Zero Emission Vehicle (ZEV) Mandate consultation closing just a few days earlier, there was never likely to be anything more than a passing comment. As it turned out, the Chancellor reiterated that the ‘government remains unshakably committed to Net Zero by 2050’ and brought forward the timetable, with an official response now expected before the end of the year.
The mandate is a key driving force behind fleet electrification but, despite recent progress, BEV registrations continue to fall well short of government targets. In reality, the government needs to balance support for manufacturers facing intense competition, especially from new market entrants, with economic viability and the country’s longstanding climate commitments.
For fleets, the priority has to be clear rules and a consistent timetable to help them plan ahead, and we will be monitoring the government’s response carefully to assess the real-world impact on fleets and drivers.
5p fuel duty cut extended to July 2027
There was some welcome short-term relief for fleets and drivers, with the 5p fuel duty cut extended to July 2027 and the RPI inflation-linked increase deferred until the same date. It’s good news, but the planned increases are a reminder that the relief is only temporary.
The OBR has previously estimated the cumulative cost of fuel duty freezes and cuts at around £120bn, compared with inflation-linked increases. This means that a rise is almost inevitable once it is economically and politically viable.
The Road Haulage Association (RHA) had been lobbying for 15p-per-litre fuel support for haulage, coach and van operators, a freeze in fuel duty, cancellation of the planned increases, and removal of the link between fuel duty and the Retail Prices Index (RPI).
Their pleas went largely unheard, but it’s clear that what’s needed is longer-term certainty in rules, levels of support and policy direction. Deferred increases are welcome but fleet operators need a level of clarity that enables them to factor in any potential rise in fuel duty to current and future contract terms.
0% VAT on domestic electricity extended to July 2027
Those who are able to charge at home will welcome the extension of zero VAT on domestic electricity to July 2027. On the other hand, depending on the tariff, it’s a saving that could easily be wiped out by the forecasted 27% price-cap increase from January 2027. This is, of course, just an estimate based on dual-fuel tariffs and the real impact will vary. The one thing we do know is that drivers on variable tariffs are facing the prospect of significantly higher electricity costs in the new year.
The good news is that even if the overnight rate rose by 27%, followed by the return of 5% VAT on 1 July, charging costs would still only reach around 2.3p per mile. This compares with 19.1p for diesel and 19.5p for petrol once the scheduled fuel-duty increase takes effect. Drivers on the fixed tariff used in our example would avoid the January increase, with charging costs rising to around 1.8p per mile in July.
VAT on public charging to stay at 20%
Despite years of lobbying, there is still no reduction in public charging VAT. In fact, in what appears to be a legislative response to the Charge My Street tribunal decision that public charging could, in some circumstances, attract just 5% VAT under the rules for small electricity supplies, the Chancellor has now confirmed that the 20% rate will remain for the foreseeable future.
This appears to close the door on a measure that would have gone at least some way towards bridging the gap between home or depot/workplace charging and the cost of using publicly accessible chargers.
For fleet operators, the disparity in charging costs significantly impacts the true total cost of ownership and highlights the importance of a cohesive charging strategy that finds the right balance between charging costs, downtime, and operational efficiency.
£100 million to reduce lower-powered public charging costs
The government plans to provide £100 million over two years to help reduce costs at local, lower-powered public chargers from next spring. This is particularly welcome for drivers living in densely populated areas without any realistic prospect of installing home charging capability, but it’s not yet clear how this will work in practice and it is, after all, a short-term measure when long-term strategies are needed. The government estimates that the measure will save an average EV driver without home charging who charges on-street around £150 per year.
Philip New’s independent review of public charging costs was also published on Wednesday 28 October, with recommendations including battery storage funding, comparison tools and tariff porting. The review suggests that its proposed package of measures could reduce local public charging costs by around 15-20p/kWh, and public charging prices more generally by up to 10p/kWh.
However, the recommended measures still fall short of bridging the gap between public and home charging costs. Compared with a leading overnight home tariff of 6.18p/kWh, average public prices are around 48p higher for Standard or Standard Plus charging and 73p higher for rapid charging.
An interesting development is the introduction of a taskforce to explore whether drivers could use their domestic electricity tariffs at local public chargers. It’s certainly worth exploring, but it would undoubtedly be technically and logistically challenging, which means that, for now, it remains no more than a good idea in search of a workable solution.
Climate Change Levy frozen
The Budget also announced that the Climate Change Levy (CCL) on business electricity will be frozen at its 2027/28 level for 2028/29. This avoids an inflation-linked increase in the levy on electricity used for depot and workplace charging, helping to contain one element of fleets’ energy costs. The levy on LPG will also remain frozen, while rates for gas and solid fuels will rise with RPI inflation from April 2028.
BiK rates published through to 2030/31
The government has now published Benefit in Kind (BiK) rates through to 2030/31, providing much-needed clarity well into the next Parliament. What’s more, drivers can now make informed decisions with a clearer view of tax liabilities throughout the contract term.
For electric company cars, the benefit-in-kind rate will rise from the current 4% to 5% in 2027/28, 7% in 2028/29, 9% in 2029/30 and 10% in 2030/31. For PHEVs emitting 1–50g/km, rates currently vary by the vehicle’s electric-only range. However, all PHEVs up to 50g/km will move to 18% in 2028/29, then 19% in 2029/30 and 20% in 2030/31.
All company-car BiK rates will increase by one percentage point from 2029/30 to 2030/31, up to a maximum of 40%. This means that in both years, a 40% taxpayer comparing two cars, each with a P11D value of £35,000, will pay £1,400 less company-car tax a year for an electric car than for a PHEV emitting 1–50g/km.
It’s certainly good for current EV drivers, but the question is whether it is enough or, given the challenge of keeping up with the ZEV mandate, the government should be widening the gap to encourage people to switch sooner.
No BiK adjustment for used EVs
The BVRLA had called for a change to the way BiK is calculated on used electric cars, arguing that basing it on the vehicle’s original P11D value is both unfair and counterproductive. Instead, it proposed using just 35% of that value for all electric cars aged three years or more.
The rationale is that the current system has the potential to weaken demand, put pressure on residual values and drive up leasing costs for both new and used vehicles. And while it’s not the only measure that matters, it certainly doesn’t help, and it seems only fair that the BiK system should reflect the real-world value of the benefit received.
Salary Sacrifice changes ahead?
Although car salary sacrifice reform was not mentioned in the speech and does not feature in the current Budget document, the version released on Wednesday included section 6.207, titled ‘Benefit in Kind Appropriate Percentage Rates for 2030-31 and potential for ULEV SalSac reforms’. This was subsequently updated to simply read ‘6.207 Benefit in Kind Appropriate Percentage Rates for 2030-31’.
This may well have been no more than a typo, or it could have been something considered and subsequently decided against. Either way, given that there has been a fair degree of discussion recently about the longevity of salary sacrifice for electric cars, we will have to wait and see what happens next.
Van and fuel benefits rise
As expected, the Van Benefit Charge and Car and Van Fuel Benefit Charges will rise in line with CPI from 6 April 2027. The Van Benefit Charge increases from £4,170 to £4,310, while the Van Fuel Benefit Charge rises from £798 to £825.
The Car Fuel Benefit Charge multiplier, used to calculate the taxable benefit of employer-funded private fuel, increases from £29,200 to £30,200.
Temporary 55p AMAP rate becomes permanent
For employees using their own cars and vans for work, the temporary 55p Approved Mileage Allowance Payments (AMAP) rate for the first 10,000 business miles has now become permanent, while the rate above this level rises to 35p from April next year. Of course, employers are not legally obliged to pay these rates, but they do set the amount that can normally be reimbursed tax-free and are used as the standard benchmark for driver reimbursement.
Amid some of the highest fuel costs in history, it’s an unsurprising and arguably much-needed measure, but it does mean that employers will want to review their own mileage reimbursement policies and consider whether company or pool cars could provide a more cost-effective and easier to control solution.
VED for cars and vans uprated in line with RPI
Vehicle Excise Duty (VED) for cars and vans will increase in line with RPI inflation from 1 April 2027. The standard annual car rate rises from £200 to £210, while the annual rate for most vans increases from £360 to £375. These increases also affect electric cars and vans, although the first-year VED rate for new zero-emission cars remains at £10.
VED loophole closed for HGV operators
Earlier this year, recognising the road haulage sector’s role in transporting goods and its exposure to rising fuel costs, the government introduced a VED ‘holiday’, reducing the annual rate to £1 for eligible HGVs taxed or renewed between 1 July 2026 and 30 June 2027.
Under the original rules, an HGV could be taxed for six months from July to December 2026 and then renewed for 12 months from January to December 2027. The government clearly sees this as taking two bites of the cherry and has acted to ensure that the benefit is limited to a maximum of 12 months and any excess saving can be recovered from the vehicle’s registered keeper.
New eVED Connect system under development
In confirming that eVED will come into force in April 2028 as originally planned, the government provided further details of the technology needed to make it work, including a new eVED Connect system for opt-in vehicle-connectivity reporting.
As with most IT infrastructure projects, there is the potential for delay, and we already know that not all of the digital features will be available at launch. That said, a mileage estimation tool is due to be available at launch and the government is looking at how features such as mileage benchmarking could help motorists make more accurate predictions. It sounds sensible, but it is also likely to be fraught with accuracy challenges when used across a variety of business sectors.
Alongside this, eVED Connect is intended to let motorists opt into automatic mileage reporting using their vehicles’ in-built connectivity. This could even have a knock-on impact for general mileage reporting, but not everyone will agree with the core principles involved. And, with no launch date confirmed for the eVED Connect system that would manage the data, fleets should plan for more manual reporting at the outset.
Finally, by 2030, the government plans to launch a system that automatically refunds drivers when they have either overestimated their mileage or sold their car. This will certainly save everyone a lot of time and hassle, but there will clearly be a need for temporary and possibly more convoluted systems to be in place in the interim and the government has promised further guidance for fleet operators later in the year.
What happens next?
As with any Budget, there will be more details that come to light over the next few weeks and months and we will be eagerly awaiting the government’s response to the ZEV Mandate consultation and further details of the policy plans arising from Philip New’s Cost of Public Electric Vehicle Charging Review. Whatever the future has in store, you can be sure we will be on hand to assess the impact on fleet operators and drivers, helping you make fully informed decisions and optimise your true total cost of fleet.