John Healey has dropped his eagerly anticipated Autumn Budget, with motorists set to enjoy savings on fuel, EV charging fees and business mileage among the headline announcements. News of a fuel duty cut will be welcome news for drivers facing the prospect of a 5p rise at the pumps.
But, with petrol and diesel costs soaring, did the Chancellor have any other choice? Not really. This almost felt like a formality. News that Andy Burnham’s VAT cut on domestic electricity, which has slashed home electric car charging costs, will be extended to July is a welcome addition. But those who don’t have their own driveway will be left wondering why the Chancellor hasn’t helped.
John Healey could have done so much more for motorists today, and millions will still be furious this evening when they look closer into the details. We take a look at the three rules Mr Healey didn’t change and why these are needed sooner rather than later.
The reduction of VAT electricity fees from 5% to 0% has been a boost to electric car owners lucky enough to have their own driveway or off-street parking bay. But millions don’t have this luxury. EV adopters in major cities without this benefit must be wondering why they bothered. Many are being forced to top up their EVs at public charging bays which are hitting drivers with 20% VAT rates.
The cost of zapping up a battery in public is around 50p per kWh compared to just 7p per kWh at home. Something needed to be done. But it wasn’t. Cue frustration.
AA President Edmund King said: “The Chancellor has missed the chance to help accelerate the transition to electric cars by retaining the 20% VAT rate on public charging. Around two fifths of households do not have any form of dedicated off-street parking, and retaining the difference in VAT rates only widens the Pavement Tax.”
They weren’t alone, Iain Reid, Global Content Director at Carwow said they had but we hoped to see VAT on public charging reduced from 20% to 5% to bring it in line with home-charging. Meanwhile, Ben Nelmes, CEO at New AutoMotive, explained that it was “not fair” that people who cannot charge their electric car at home must pay significantly more for electricity.
I’d expect this argument to continue to run over the coming months.
If EV drivers thought that was bad, the Treasury’s Budget document confirms that Rachel Reeves’ new pay-per-mile car tax plan will go ahead. The Treasury stresses that the Electric Vehicle Excise Duty (eVED) system will see a new mileage-based charge for electric and plug-in hybrid cars from April 2028. That’s surely not the news that EV owners wanted.
If the Government is serious about its net zero plans, a special tax charge slapped on electric cars isn’t going to help. Those sitting on the fence will run a mile when they hear of plans to hit them with 3p per mile. Meanwhile, how unfair is it that those forced to drive longer.
Sue Robinson, Chief Executive of National Franchised Dealers Association (NFDA), blasted Mr Healey’s decision not to cut the fee, adding: “The 2026 Budget was a missed opportunity. The proposed mileage-based EV tax risks making electric vehicle ownership less attractive, leading to it to be becoming non-workable. Adding further costs and complexity for motorists could undermine progress towards wider EV adoption.”
Although Mr Healey did stop a planned fuel duty price hike, petrol and diesel owners still have grounds to feel slightly disappointed this evening. Labour have stopped a price hike, but they have done nothing about lowering already sky-high costs. With diesel rates exceeding previous all-time highs earlier this month and still sitting close to £2 per litre, surely the Government should have intervened.
The Government has been cashing-in on higher VAT revenue for weeks as petrol and diesel costs soared. Experts have been demanding cuts for a while, but Labour hasn’t heard them.
After the news, Steve Gooding, director of the RAC Foundation said: “Delaying a planned hike in fuel duty is welcome, but falls some way short of actually making the cost of refuelling cheaper. Meantime, the Treasury will still pocket getting on for half of everything paid on the forecourts. The war in the Gulf has already cost drivers an extra £10 billion and it unfortunately looks set to cost billions more in the months ahead.”