What the 2025 Budget Means for Drivers
The Government’s Autumn Budget brought in several changes that will affect car owners, electric vehicle (EV) drivers, and anyone thinking about running a car in the UK. Heres the lowdown.
Fuel and Running Costs: Short-Term Relief, Long-Term Shift
- Fuel duty stays frozen… for now. The Budget extends a temporary cut on fuel duty, meaning petrol and diesel drivers get a bit of breathing room until at least August 2026.
- But an EV-specific pay-per-mile charge is coming (from 2028). From April 2028, owners of electric cars will be charged 3p per mile, while plug-in hybrids will be charged 1.5p per mile.
- This is part of a broader shift: as more people go electric (fewer oaying fuel duty), the government is changing the tax model to recoup lost revenue.
What this means for you: If you drive a petrol or diesel car, you get a short term win: no fuel duty hike yet. But if you own (or plan to buy) an EV or plug-in hybrid, budget for the upcoming per-mile tax from 2028, especially if you drive often or long distances.
EV Incentives & the Cost of Going Electric
Since the per-mile charge may make some EV owners (or prospective owners) nervous, there are some incentives to soften the blow:
- The government is extending the electric car support scheme, meaning grants toward EV purchase may continue, making the switch to EEV slightly more affordable.
- However, with the new per-mile system and added road-use costs, total cost of ownership for EVs will shift. It’s not just “buy it once and forget it.”
What it means for you: If you’re considering an EV right now, great timing for incentives. But run the numbers based on how much you drive. High-mileage EV drivers should check whether an EV still saves money compared to petrol/diesel after the new charges.
What to Watch Out For: Hidden Costs & Changing Budgeting Needs
- Long-term: fuel duty freeze ends, and the temporary 5p cut is only extended to August 2026, after that fuel duty could start rising again.
- For EV owners: per-mile charges = a new recurring cost. The more you drive, the more you pay.
- Anyone buying or financing a car now needs to think ahead. What will the total running cost be in a few years? Insurance, maintenance, tax, per-mile charges, fuel, depreciation… it all adds up.
What you (as a Driver/Prospective Buyer) Should Do Next
- If you drive a lot: Re-calculate your yearly mileage cost now – is an EV still worth it when per-mile charges apply?
- If you’re financing a car: Factor in future costs (fuel or mileage tax), not just deposit and monthly repayments.
- If you’re thinking of upgrading: Consider whether it makes sense to wait before deciding on EV vs petrol/diesel, especially if high mileage is involved.
The Autumn Budget gives drivers a bit of short-term relief, but also signals a big shift in how cars will be taxed and used long-term. For many, it brings new complexity when deciding what car to drive, how to finance it and whether an EV is still the “smart” choice.