On 26 November 2025, Chancellor Rachel Reeves will set out the 2025 Autumn Budget, with road pricing, tax shifts and charging policy all in scope, the decisions made this week could reshape EV adoption, fleet strategy and the wider motor finance landscape. Comment by Maria Bengtsson of EY.
As the Chancellor prepares to deliver the Autumn Budget, the UK faces a pivotal moment in its transition to electric mobility. The measures expected this coming week could reshape cost dynamics for drivers and determine how businesses plan, finance and operate their fleets. Motor finance providers, in particular, will be watching closely. The policy signals delivered now could have the potential to influence investment decisions and consumer behaviour going forward.
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One of the most significant changes expected is the introduction of a road pricing scheme for electric vehicles. With fuel excise duty forecast to raise £24.4 billion in 2025–26, the long-term revenue challenge is clear. As more drivers migrate away from petrol and diesel vehicles, the Treasury needs a sustainable alternative, and mileage-based charging appears increasingly likely.
A rate of around 3 pence per mile has been discussed. Even at that level, EV drivers would still pay less than their petrol counterparts today. But the shift nonetheless marks a turning point. It will reduce the running-cost advantage that has been central to the EV proposition and could make switching less attractive for some drivers. And as fuel duty revenues continue to fall, pressure may build to increase EV-related tax rates further.
For businesses, the implications are immediate and practical. Fleet operators that have invested heavily in electrification will need to revisit cost models and forward plans. Higher operating costs, even modest ones, can affect procurement cycles, financing structures and charging infrastructure strategies. For some organisations, this may slow the pace of further EV adoption.
The Budget may also bring changes to Vehicle Excise Duty and benefit-in-kind rates. The Government’s decision earlier this year to introduce a new electric car grant was designed to support the market, but new tax obligations could counteract its effect. This is especially significant given the demands of the Zero Emission Vehicle Mandate, which requires manufacturers to increase the share of EVs they sell each year. Balancing fiscal needs with the UK’s decarbonisation commitments will not be easy, but it is essential.
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By GlobalDataAnother area to watch is VAT. Speculation around a potential reduction in the VAT rate for domestic energy raises a specific challenge. While such a move would support households managing wider cost-of-living pressures, it would also widen the gap between home-charging VAT and the higher rate applied at public charge points. This risks disadvantaging drivers without off-street parking, potentially discouraging EV uptake among the consumers who already face higher charging costs.
For the motor finance sector, the Autumn Budget marks a significant moment that could reshape consumer affordability, fleet economics and the overall business case for electric mobility. The UK’s transition to zero-emission transport is still moving forward, but continued progress depends on a policy framework that supports both adoption and long-term investment.
Striking the right balance between incentivising EV adoption and meeting fiscal targets will be crucial.
