The Autumn Statement 2025 brings some of the biggest motoring changes in years. Higher Vehicle Excise Duty (VED), future pay-per-mile charges for EVs, Motability reforms, fuel duty updates and new luxury car tax rules will affect almost every UK driver. This guide explains the main announcements.
Car Tax (VED) Changes from April 2025 and April 2026
Since April 2025, electric cars have no longer been exempt from VED. EV keepers now pay a £10 first-year rate and then move onto the standard annual rate, bringing them in line with petrol, diesel and hybrid vehicles. First-year VED for petrol, diesel and hybrid cars also increased, with the biggest rises applied to high-emission models.
From April 2026, these updated rates will continue and are set to rise with inflation. All newly registered cars will pay a first-year CO₂-based charge followed by the standard flat rate. EV keepers will continue to pay a small cost in year one (currently £10) and the standard rate from year two (currently £195), while petrol and diesel vehicles will continue to face higher first-year costs based on emissions bands.
More information on car tax, how it works and how you can check how much is due for your vehicle.
Fuel Duty Freeze
What is fuel duty?
Fuel duty is charged on every litre of petrol and diesel sold in the UK. Drivers currently pay 47.95p per litre, roughly 30-40% of the total net cost of fuel. This has been discounted by 5p since 2022, meaning fuel duty would normally be 52.95p. The tax applies to all road fuels used in cars, including petrol, diesel and biodiesel blends. Fuel duty is added before VAT, meaning drivers also pay 20% VAT on top of the duty, which increases the overall cost at the pump.
What fuel duty changes did the Chancellor announce?
Fuel duty will remain frozen until September 2026, keeping the current 5p-per-litre reduction in place. After this, the Government will phase out the temporary cut introduced in 2022. From April 2027, fuel duty increases will follow the Retail Prices Index (RPI). Drivers should expect higher pump prices as these changes take effect.
Fuel duty has been frozen for over 15 years, a policy the Office for Budget Responsibility says has reduced Government revenue by around £120 billion. Motoring organisations welcomed the short extension but warn that fuel costs will rise once the reversal begins. A new national “Fuel Finder” tool will also launch in early 2026. It will require all fuel retailers to publish live pump prices to help drivers find the cheapest fuel locally.
Luxury Car Tax (Expensive Car Supplement) Threshold Increase
The Autumn Statement also changes the Expensive Car Supplement, often known as the Luxury Car Tax. From April 2026, the threshold for electric vehicles increases from £40,000 to £50,000. More EV buyers will therefore avoid the supplement.
This charge currently adds £425 per year for five years from the second year of registration. The higher threshold applies only to EVs; the £40,000 limit remains for petrol, diesel and hybrid cars. The Government has also added £300 million of extra funding to extend the Electric Car Grant until at least 2029/30, offering up to £3,750 off eligible models.
EV Pay-Per-Mile Road Charging from 2028
The Autumn Statement confirms that a national pay-per-mile road charging system for EVs and plug-in hybrids will begin in 2028. This change is designed to replace falling fuel-duty revenue as more drivers switch to fully electric cars.
Final rates will be agreed after a public consultation in 2026. The Chancellor proposed rates of 3p per mile for electric cars and 1.5p per mile for plug-in hybrids. Typical EV drivers could pay an extra £200–£300 a year, with high-mileage drivers facing more. This move shifts motoring taxation toward a usage-based model and will influence long-term cost-of-ownership decisions.
How will mileage be measured under the scheme?
The Chancellor has suggested in interviews that mileage will be self declared by the keeper and checked/corrected against mileage recorded at MOTs. However, when asked about how this will work for new EVs in the first three years before an MOT is due no detail has been provided. Some commentators have also speculated that manufacturers will be required to handover mileage data to the Government. The public consultation will no doubt cover all these practicalities.
Major Motability Scheme Changes
What is the Motability scheme?
The Motability Scheme allows eligible disabled people to use their mobility allowance to lease a new car, scooter or powered wheelchair. The lease covers insurance, servicing and breakdown assistance, making it an affordable and simple way to stay mobile.
What changes are in store for Motability?
The Autumn Statement confirms significant changes to the Motability scheme. These include:
- Removal of premium brands such as BMW, Mercedes-Benz, Audi, Lexus and Alfa Romeo
- A target of £1 billion in system-wide savings
- A requirement for Motability to move toward a 50% UK-built fleet by 2035
- Changes to tax relief and advance payments on higher-value vehicles
These reforms will reduce vehicle choice and may increase costs for some users, especially those who previously needed premium or specialist models for accessibility.
Other Key Motoring Announcements
The Autumn Statement also included wider motoring measures:
- More investment in EV charging infrastructure, especially in rural areas
- Long-term stability for Benefit-in-Kind (BiK) rates on electric company cars until at least 2028
- Continued support for the UK EV supply chain, including battery production and charging-network expansion
These measures aim to support EV adoption and strengthen the UK automotive industry.
What This Means for Drivers and Car Buyers
The Autumn Statement marks a major shift in how UK motoring is taxed. Key impacts include:
- EVs are no longer cheaper to tax
- First-year VED costs are rising for all fuel types
- Fuel prices are likely to increase from 2026
- EV drivers will face new per-mile charges from 2028
- Motability users will see reduced choice and possible higher costs
- Salary-sacrifice and company-car EV schemes remain strong value
Drivers should review total cost of ownership when choosing their next car. This includes VED, potential mileage charges, fuel or charging costs, supplements and available grants. Total Car Check provides a free initial vehicle check, including VED rates, fuel costs and broader fuel-economy information, to help buyers make informed decisions.