Autumn Budget 2025 – Summary For Motorists

Chancellor Rachel Reeves has delivered her Autumn Budget. Here’s a summary for motorists: everything you need to know.

Road Tax (VED) And MOT Exemption To Continue For Historic Vehicles

Following rumours that Reeves was planning to tax Historic vehicles, it was with bated breath that the classic car community waited for the announcement of the Autumn Budget. Road tax (VED) and MOT exemption are key draws of classic vehicle ownership. Losing this exemption would impose considerable extra expense on owners, especially those with multiple Historic vehicles.

The classic driver is a very soft target for taxation. While we’re a diverse community enjoying classics on a range of budgets, we must all concede that owning a classic vehicle is a frivolity when pitted against the necessities of feeding ourselves and keeping a roof over our heads. If the rumours had been true, we could be waking up to some very bad news.

Fortunately, this didn’t happen. Classic vehicles will continue to be road tax and MOT exempt, for now at least.

EV Drivers Faced With Pay-Per-Mile Charge From 2028

Surprisingly, it’s EV drivers who will be hardest hit, with the government introducing a new pay-per-mile tax (eVED) starting from 2028. EVs will be charged at 3p per mile, while plug-in hybrids will be charged at 1.5p per mile. The charge will rise with inflation and is projected to cost an average EV driver £240–£300 per year, in addition to the existing Vehicle Excise Duty (VED). All the more reason to drive a classic, we say.

It’s said that the increased revenue generated by EV drivers will be used to improve the road network. Hopefully, that means filling in some of the cavernous potholes this country is plagued with. We can but dream.

From April 2026, the threshold for the ECS, or “luxury car tax,” will increase from £40,000 to £50,000 for electric cars. Fewer new EVs will face the £425 annual charge, which is levied for five years. Additionally, the government’s EV grant will be extended from 2028 to 2030, but this seems like small compensation for the other costs on the horizon.

Fuel Duty Frozen – For Now

For those of us still clinging to internal combustion, fuel duty will remain frozen in the short term. It’s set to increase annually with inflation from April 2027. We’re told that a new tool will be available from early 2026, allowing drivers to find real-time fuel prices at forecourts.

Luxury Cars Scrapped From Motability Scheme

Reeves plans to save up to £1 billion per year by cutting the Motability scheme. Those on mobility allowances, such as Personal Independence Payment (PIP), will not be able to lease “premium cars” from luxury brands like Mercedes-Benz, Audi, and BMW.

Summary

So, all in all, not as bleak a picture as we might have expected; the biggest surprise is that the government appears to be de-incentivising EV ownership.

Come what may, you’ll still find us at the wheel of a classic.