Autumn Budget: Fuel Duty Frozen And £100m For Public Ev Charging

Chancellor John Healey has delivered his first budget, announcing several measures that are intended to save motorists money as they battle rising fuel prices.

Chief among the new measures is an extended freeze on fuel duty, maintaining the 5p per litre reduction on the levy until July next year.

The cut had been due to expire on 31 December 2026, but the total duty on fuel will now be held at 52.95p per litre.

Announcing the extension, chancellor John Healey said the decision was down to “the war in the Middle East still driving high fuel prices”. 

The government said "the majority of the rise of inflation" from 2.6% in June to 3.5% in September was a result of the rise in motor fuel prices.

Leader of the opposition Kemi Badenoch said she was "glad to see" fuel duty temporarily frozen, but questioned why it could not be maintained at that rate for longer. "We [the Conservative Party] froze fuel duty for 14 years – they can do better than that," she said.

Edmund King, president of motoring body the AA, said the duty freeze "only delays [...] the price shock" when it is increased.

King said the government "could have gone further and cut fuel duty by an extra 5p, even if only for diesel", arguing that increased income from VAT – off the back of inflated prices – could have offset a resulting loss in revenue. "Delaying the fuel duty increase is a welcome trick, but no treat for drivers," he said.

EV charging

Healey confirmed that the temporary removal of VAT on domestic electricity will be extended until July next year. Although this measure is not directly targeted at motorists, those capable of charging electric vehicles from home stand to make savings as a result.

However, electricity drawn from a public EV charger will continue to be charged VAT at a rate of 20%.

King said this "widens the pavement tax" – the inequity between those capable of home charging and those who cannot – and called it a "missed chance" to incentivise uptake of EVs.

The government said it is considering allowing EV drivers to access domestic VAT rates at such charge points, and is "taking immediate steps to establish a taskforce" on the issue.

It added it will make £100 million available to reduce prices at "local, lower-powered public charge points" to narrow the gap. The funding will be split across two years, with £50 million to be spent in the 2027-28 fiscal year and the other £50 million in 2028-29.

Vicky Edmonds, CEO of lobby group EVA England, said the £100 million funding is "welcome" but that it is "disappointing that we still see no movement from government" on reducing VAT on public charging.

Pay-per-mile for electric cars

Although Healey did not directly discuss the goverment's plans to introduce a pay-per-mile tax on electric vehicles – also known as Electric Vehicle Excise Duty (eVED) – it has now clarified its position.

The new duty will be introduced in April 2028, at which point it will introduce a new tool for electric vehicle drivers to estimate and declare their mileage. It is currently "undertaking proof of concept work" such an app.

It is also working on a mechanism by which drivers can opt in for their cars' computers to automatically declare their mileage, so they do not have to do it manually.

It aims to automated a refunds process – for when a driver has overestimated their mileage and thus overpaid, or has sold their car – by 2030.

Further guidance will be provided to large fleet operators later this year, the government said.

Mileage rates

The government is also raising its approved mileage rates for business drivers.

The rate for motorists covering less than 10,000 miles per year was temporarily raised from 45p per mile to 55p for the current tax year. This rise is now permanent, said Healey.

Meanwhile, the rate for those covering more than 10,000 miles annually has risen from 25p to 35p.

Company car tax

In addition, the government confirmed that benefit-in-kind (BiK) tax bands for company cars will rise by one percentage point in the 2030-31 fiscal year.

It expects this to raise an additional £310 million in 2030-31 and an extra £345 million in 2031-32.