Autumn Budget 2026: What it means for motorists

Chancellor John Healey has announced a continued freeze on fuel duty, a VAT cut to household electricity and an increase in business mileage rates in his first Budget.

The measures are designed to give “Britain some breathing space on the cost of living”, according to the Chancellor, although he acknowledges the conflict in the Middle East continues to be “a key driver towards the challenges we face today”.

At the same time, the Government has published a review into public EV charging costs, announcing price cuts for "local, lower-powered public chargers".

Autumn Budget 2026

Fuel duty freeze extended to summer 2027

The freeze on fuel duty, which has been in place since 2011, is being extended until July 2027.

A 5p per litre cut was introduced in 2022, initially temporarily, and was due to be reversed from April 2027 in line with the Retail Prices Index (RPI).

However, due to the significant rise in fuel prices over the past 12 months, this plan has been delayed. Fuel duty will remain at 52.95p per litre.

Fuel duty has now been frozen for 17 consecutive years. In 2025, the OBR estimated it had cost the UK Government £120 billion in lost fuel duty income.

It remains unclear as to whether a 5p per litre increase to fuel duty will follow in July 2027. The Chancellor has rejected calls, however, to reduce the VAT on petrol and diesel.

• RAC Fuel Watch: Latest Petrol and Diesel prices

RAC senior policy officer Rod Dennis said “While drivers may breathe a mild sigh of relief knowing that fuel duty isn’t going up, many are likely to be disappointed the Chancellor didn’t go further to support them.

“RAC research published yesterday showed nearly two-in-three regular drivers wanted cuts to duty or VAT on fuel, with a similar proportion now cutting back on other spending because of the high cost of fuel.

“A freeze only avoids making an already difficult situation worse – it doesn’t make filling up any cheaper. And it’s worth remembering that pump prices still soared this summer, despite fuel duty being at this very same reduced rate.

“Drivers will now have to hope for an easing of the international conflicts that have pushed up oil prices and disrupted fuel supplies if pump prices are to come down in a meaningful way.

“In the meantime, they can ensure they always pay the lowest price for filling up by using the free myRAC app to locate the cheapest forecourts up and down the country.”

VAT cut on household electricity and public charging price cut

Electric car drivers who charge at home are getting some relief from rising energy prices, with an extended cut on VAT for household electricity announced.

Alongside this, the Chancellor has confirmed a £100 household winter energy payment to people in council tax bands A to D.

A temporary VAT cut from 5% to 0% on electricity came into effect on 1 October.  The Chancellor has now extended that cut until July 2027, claiming it will take £50 off the annual energy price cap.

The further announced household winter energy payment will be paid directly into people’s bank accounts, although the exact date of this is not yet clear. The scheme will cost £2.6bn, according to the Chancellor.

Following the Budget statement, the Treasury published a factsheet detailing planned cuts to electric vehicle public charging costs. This follows an independent review into the rising cost of charging EVs on the public network, announced at last year's Autumn Budget.

A statement confirms that the government is "cutting prices at local, lower-powered public chargers to give electric vehicle drivers who rely on them some breathing space - saving them around £150 per year on average".

From Spring 2028, £100 million will be set aside over two years to cut public EV charging costs. This will cover chargers "typically found on residential streets, where drivers can leave their vehicles to charge for several hours or overnight" - said to be around 1/3rd of the network.

It's not yet clear how this support will be implemented or whether the £100 million will be directed towards specific networks or charging companies.

Also confirmed is the launch of a new "tariff porting" taskforce, led by industry experts, to "explore allowing drivers to use their cheaper domestic energy tariff at certain public chargers". Details of that will be announced at a later date.

Business mileage rate increase stays

The Chancellor has also confirmed that the tax-free mileage rate for those driving for business has been permanently fixed at 55p per mile.

That follows what was meant to be a temporary increase from 45p earlier this year to help tackle the rising cost of motoring.

Drivers using their own vehicle for business purposes will be able to claim 55p per mile for the first 10,000 miles they travel – effectively amounting to a £5,500 non-taxable allowance payment.

The rate for higher mileage users will also increase from April 2027. Anyone driving above that 10,000-mile limit will be able to claim 35p per mile, up from 25p.

Further clarity on 'eVED' plug-in car charge

The Government has released further details on plans for a new pay-per-mile road tax, called Electric Vehicle Excise Duty (eVED), for electric and plug-in hybrid cars.

Planned to be introduced in April 2028 and announced at last year's Autumn Budget, eVED will apply to both new and existing plug-in cars and is intended to help replace the revenue lost in fuel duty as EVs become more popular.

• The definitive guide to UK car tax (VED)

After a consultation with industry experts, the Government will introduce a "mileage estimation tool" at launch to help motorists work out their potential costs for the year, as well as an opt-in 'eVED Connect' system to use vehicles' in-built tech to automatically estimate or report mileage.

An automatic refunds model will be developed by 2030 for those who overestimate their annual mileage or sell their car during the year.

The Government pledges to "work closely with industry and motoring representative groups ahead of implementation, and make available further guidance for fleet operators later this year."

VED rates to increase in April 2027

The Government will increase VED rates for cars, vans and motorcycles in line with the Retail Prices Index (RPI) from April 2027. This will affect the majority of VED bands, while the standard rate for car drivers is likely to rise by £5 which means the tax rate for petrol, diesel and hybrid cars registered on or after 1 April 2017 will be £205.