Budgets always generate a lot of noise, and this one was no exception. Once you strip away the headlines, though, there are a handful of genuine, practical changes for anyone who drives, whether for work or just day to day.
The fuel duty freeze, something you’ve probably stopped noticing because it’s been in place so long, has now been extended again. The 5p-per-litre cut that was due to start reversing was pushed back once more, with the Chancellor confirming it will stay at 52.95p per litre until at least July 2027. Fuel duty has now been frozen for seventeen years running. It’s worth being realistic about what this means at the pump, though: holding duty steady isn’t the same as cutting prices, and it won’t offset the effect of rising global oil costs, which have been the main driver of recent increases regardless of what the Treasury does.
For anyone who uses their own car for work, there was better news. The temporary rise in the tax-free mileage rate, from 45p to 55p per mile for the first 10,000 business miles a year, has now been made permanent rather than quietly reversed. The rate for miles beyond that is also going up, from 25p to 35p, from April 2027. The government reckons around three million people will feel the benefit of this. If you cover 6,000 business miles a year, that could be worth up to £120 in extra tax-free allowance. Cover 15,000, and it rises to around £300. It’s a genuinely useful change for tradespeople, reps, carers and anyone else who racks up miles in their own vehicle, and it’s one we’ll be flagging to our business customers directly.
On the electric vehicle side, there’s a mixed picture. The VAT cut on household electricity, from 5% down to 0%, has been extended to July 2027, which should help take some of the sting out of charging at home, alongside knocking roughly £50 a year off typical energy bills more generally. Public and workplace charging is a different story: the Budget confirmed that VAT on public and workplace charging stays at the full 20% rate, a point that’s caused some confusion given the “EV support” framing in some coverage. There is a £100 million fund earmarked to bring down the cost of local, lower-powered public chargers, which the government says could save regular users of those chargers around £150 a year, though the timing of that support is still being worked out.
The bigger change for EV drivers is further down the road. From April 2028, a new pay-per-mile charge (officially called eVED) will apply to electric cars, both new and existing ones. No per-mile rate has been set yet, and there’s a mileage estimation tool and an opt-in system still in development, so there’s genuinely nothing to act on yet beyond being aware it’s coming.
Finally, standard road tax (VED) for petrol, diesel and hybrid cars is set to rise in line with RPI inflation from April 2027, which is expected to push the standard rate up by around £5.
None of this changes overnight, and most of it won’t affect your day-to-day driving until 2027 or 2028. But if you’re weighing up your next car, whether that’s sticking with petrol, going hybrid, or making the switch to electric, it’s worth factoring these dates into the decision rather than being caught out later. If you’d like a second opinion on how any of this affects your own situation, personal or business, we’re always happy to talk it through.