Autumn Budget 2025 preview: tax, petrol, potholes and why drivers should care

It’s just a short time until Chancellor Rachel Reeves will unveil her fiscal plans for the nation as she prepares to unveil the Autumn Budget for 2025/26.

While it’s easy to just switch off from all the Whitehall drama – trust us, after the last few years, we don’t blame you – this year’s Budget could send shockwaves through the car industry and have a tangible impact on millions of drivers across the country.

So with this in mind we’ve put together a guide explaining all of the potential changes that, if introduced, would affect motorists in particular. Again, it’s worth highlighting that none of this is confirmed and is largely conjecture based on rumours, leaks and hints from the government itself. 

Pay-per-mile tax for EVs

Undoubtedly the headline (and most controversial) change rumoured to be brought in by the government is a pay-per-mile tax (also known as ‘road pricing) for electrified cars.

Designed to fill the gaping financial hole created by fewer drivers spending cash at the petrol and diesel pumps, a pay-per-mile tax would work by charging EV drivers a fixed rate for every mile they drive – potentially even over and above a standard flat rate of VED.

The number that has been thrown around the most is three pence-per-mile, which would equate to £12 for a return trip from London to Manchester; analysts expect it to cost drivers around £250-300 per year. Hybridised cars could also be charged, but at a lower rate than EVs as the government will still be able to generate tax revenue from fuel sales to owners of those vehicles.

In a statement, a spokesperson for HM Treasury said: “Fuel duty covers petrol and diesel, but there's no equivalent for electric vehicles. We want a fairer system for all drivers.”

In terms of when such a scheme might be introduced, it is expected that it could come in from 2028, following an official consultation. 

Reversal of 5p fuel duty cut

Since 2022, a five pence cut to fuel duty has been in place to help ease the burden of exceptionally high fuel prices on drivers. With some think tanks suggesting these benefits aren’t being passed onto consumers and the cut having been in place a lot longer than was initially anticipated, it looks as if this could be the year when the action is reversed.

Without the current fuel duty cut in place, we could see the average price for petrol and diesel rise to over £1.42 and £1.50 per litre respectively – only a fraction below the all-time high. 

President of the AA Edmund King said: “The danger of ramping up motoring costs further is that it hammers working people, adds costs to deliveries and businesses — and ultimately fuels inflation.

Cuts to Motability scheme

Motability is a lifeline to many disabled people across the UK, providing accessible transportation in exchange for their PIP (Personal Independence Payment). However, coinciding with government crackdowns on disability benefits and with as many as 860,000 people signed up to the scheme as of March 2025, some form of change seems inevitable.

So what might change? Well, it’s rumoured that Reeves could save as much as £1 billion per year by limiting which disabilities put someone in-line for the Motability scheme, preventing users from opting for more expensive luxury models and even removing tax breaks; Motability customers don’t have to pay VED tax, for example.

More funding for potholes

Last year in its first Budget, the Labour government announced that it would invest an additional £500 million per year for local road maintenance, which was bumped up to a total of £1.6 billion of funding for 2025.

With this in mind, it’s likely that the government might once again introduce additional funding for pothole maintenance for 2026, with estimates from the Asphalt Industry Association suggesting that the cost to fix the UK’s roads could be as high as £17 billion.

Lower EV charging costs

There is a huge disparity between the price of charging an EV at home and plugging in when you’re out and about. A higher rate of VAT (20 per cent vs five per cent for home charging) plus chargepoint operators looking to recoup the cost of charger installation mean that public charging can be just as, or even more, expensive than filling an internal combustion car with fuel.

This being the case and with EV sales not accelerating at the speed once hoped, the RAC’s spokesperson, Rod Dennis, says: “It’s vital that public charging costs for drivers come down. Reducing the rate of VAT charged on electricity sold at EV chargers from the present 20 per cent to match the 5 per cent charged to domestic customers would be a huge help.”

Such a move would also help to offset any decision to impose a pay-per-mile tax on EVs.

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