Chancellor John Healey has delivered the Autumn Budget 2026, announcing several changes that could affect UK motorists and businesses, from fuel duty and tax-free business mileage rates to the cost of charging electric vehicles.
The 5p-per-litre fuel duty cut has been extended until July 2027, while calls to reduce VAT on petrol and diesel have not resulted in any changes. Here is a breakdown of the key announcements and what they mean for drivers and fleets.
The headlines for drivers
- Fuel duty: The 5p-per-litre cut and the freeze on fuel duty are extended until 1 July 2027, keeping duty at 52.95p per litre.
- Household electricity: The temporary 0% VAT rate is extended until July 2027. The Government says this will take around £50 off the annual energy price cap, which helps EV drivers who charge at home.
- Public charging: VAT on public charging stays at 20%, but £100 million over two years from spring 2027 will cut costs at local, lower-powered chargers. The Treasury says this is worth around £150 a year to the average on-street driver.
The headlines for businesses and fleets
- Mileage rates: The 55p approved mileage rate for the first 10,000 business miles is now permanent, and the rate above 10,000 miles rises from 25p to 35p from 6 April 2027.
- Company car tax: Rates for 2030/31 rise by one percentage point in every band. Electric cars move from 9% to 10%.
- Capital allowances: The first-year allowance rises from 40% to 50% from 1 January 2027, but the main writing-down allowance falls from 14% to 12% from 1 April 2027. Cars are excluded from the first-year allowance.
- Pay-per-mile tax: eVED is confirmed for 1 April 2028, at 3p per mile for electric cars and 1.5p per mile for plug-in hybrids.
What it means in practice
For private drivers, the support is real but temporary. Both the fuel duty cut, and the electricity VAT relief currently end in July 2027, so the picture could change again within a year.
For fleets and leasing customers, the Budget brings more certainty than change. Company car tax rates are now set up to 2030/31, which helps with planning four-year leases, and the higher mileage rates benefit employees who use their own vehicles. Against that, a lower writing-down allowance from April 2027 and pay-per-mile tax from April 2028 add pressure on costs.
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