Budget 2025 - what it means for drivers
- New Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars from April 2028. Drivers will pay for their mileage alongside their existing VED
- Consultation published which provides further detail on how eVED will work and seeks views on its implementation. No requirement to use trackers
- Review of the cost of public EV charging and more infrastructure investment
- Electric Car Grant gets £1.3 billion of funding, extended until 2029-30
- VED Expensive Car Supplement threshold for new EVs increased from £40,000 to £50,000, with effect from 1 April 2026
- Changes to benefit-in-kind rules for Employee Car Ownership Schemes (ECOS) delayed until April 2030
- 5p fuel duty cut extended until the end of August 2026
THE initial reaction Broker News has gathered to the EV and company car elements in the autumn budget is mixed, with some elements welcomed but eVED implementation posing more questions.
EV mileage charge and fuel duty reaction
From April 2028, drivers of fully electric cars will pay a new mileage-based charge of 3p per mile, with plug-in hybrid drivers paying 1.5p per mile, on top of standard VED. Having been widely trailed, the announcement wasn’t a surprise to the industry.
“For our customers, this is a mixed picture,” says Mike Thompson, Chief Operating Officer at Leasing Options. “EV and plug-in hybrid drivers still benefit from lower energy costs than most petrol and diesel drivers, but the introduction of pay-per-mile charging clearly narrows the running-cost gap and will need to be factored into future leasing decisions, especially for higher-mileage users.”
Mike says that he is already fielding fleet questions about how it will be monitored and reported. “Any system for recording mileage must be transparent, easy to understand and clearly communicated from the outset, so customers know exactly what they will pay and how their data is being used.”
“Clear, simple rules are essential if motorists are to plan confidently and make informed choices about their next car.”
Paul Hollick, Chair of the Association of Fleet Professionals (AFP) joined other industry figures and organisations who will be keen to contribute to how the eVED will work. “What is needed now is a conversation across the fleet sector about what we want from such a scheme in terms of its timetable and implementation – a dialogue where we expect the AFP to take a central role.”
"Initially, our main concern is that it shouldn’t arrive in a form that could hamper electrification or cause any hesitation among potential business and private EV buyers.”
He added: “We’re looking at a point two-and-a-half years away, which at least creates time and space for serious discussion.”
“The priority here should be to ensure that it doesn’t create a negative perception among consumers when it comes to both new and used electric cars,” cautioned Philip Nothard, Chair, of the Vehicle Remarketing Association (VRA). “It needs to be easy to understand and simple to collect. It should be noted that the rates being proposed by the government add up to road tax at about half the level of an ICE equivalent.”
On the extension of the fuel duty freeze only until September 2026 when it is expected to increase in stages, Paul Hollick remarked: “This is probably unexpected and definitely unwelcome at a time when fleet spending is under pressure.”
Electric Car Grant extended
The Vehicle Remarketing Association (VRA) acknowledged the success the ECG has had so far but will likely not be alone in wishing that the used EV market had been addressed, said Philip Nothard in his role as VRA Chair. “It’s fair to say that the amounts being committed are substantial although I suspect, if you’d asked the remarketing sector, they’d have liked to have seen at least some of that cash channelled towards used EVs.”
The increase in the expensive car allowance – from £40,000 to £50,000 – was generally welcomed by the commentators here.
Changes to ECOS delayed
There was a sigh of relief that the end of Employee Car Ownership Schemes in October 2026 has been postponed until 2030. “The delay to the suspension of the Employee Car Ownership Scheme is welcome news for UK retailers,” said Philip Nothard in his position as Insight Director, Cox Automotive. “While the additional funds allocated to grants to incentivise electric car adoption and improve charging infrastructure are equally good news. However, the new electric pay-per-mile tax threatens to obscure the benefits these will deliver.”
Want to understand more about eVED?
You can read about the Government’s intentions for the pence per mile tax on electric cars in this document: Consultation on the Introduction of Electric Vehicle Excise Duty (eVED).
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Russell Hayes’ early career was 14 years of motoring journalism in print (for What Car?), television (for Top Gear), as well as online. Since 2007 he has authored 12 motoring history books on subjects including TVR, the Earls Court Motor Show, the Volkswagen Golf and Aston Martin – see Russell Hayes on Amazon. However, he’s not forgotten how to be a motoring journalist and now writes for UK consumer motoring sites – not to mention Broker News. When he’s not writing, Russell can be found in the cinema or planning his next travel adventure.
