The Chancellor Of the Exchequer delivered her budget in the Houses or Parliament this week, and we're going to look at all the changes being made that impacts car drivers in the coming months and years.

Changes to petrol and diesel cars‍^‍

Fuel Duty

^‍The good news for motorists of petrol and diesel cars is the 5p fuel duty cut that was first introduced in March 2022, and frozen since, will remain frozen until August 2026 and will gradually increase by 5p through to March 2027. The planned increase in fuel duty (inline with inflation) has been cancelled for 2026-2027 financial year saving motorists £89 over the year.

Petrol Cost Tracker

A new Department for Energy Security and Net Zero’s open data Fuel Finder scheme launches from spring 2026 to help motorists compare fuel prices in real-time between forecourts to ensure the least expensive fuel can be found, and encouraging competition to keep prices down, potentially saving motorists a further £40 per year.

Changes to Electric Cars

The Expensive Car Supplement

The Expensive Car Supplement, first introduced to EV’s costing £40,000 or more from 01 April 2025, will see the threshold raised to £50,000 for cars registered on or after 01 April 2026. This new threshold applies to electric cars only and is also applied retrospectively to cars purchased between 01 April 2025 and 31 March 2026. The £40,000 threshold remains in place for petrol, diesel and hybrid cars.

eVED - Pay Per Mile

A new Pay Per Mile levy will be introduced from April 2028 called eVED, or Electric Vehicle Excise Duty. This will be applicable to electric cars and plug-in hybrid cars (PHEVs) and will apply alongside VED (and the Expensive Car Supplement if applicable), charged at a rate of 3p per mile - which is around half the price of fuel duty per mile. Also, 1.5p per mile for Plug-in hybrid cars - which is a quarter of the fuel duty price, given that PHEV drivers will also pay fuel duty on the petrol and diesel consumed.

For EV drivers covering 10,000 miles per year, they will see an eVED bill of £300, with PHEV drivers paying £150 per year for the same mileage.

The rate will be updated in line with CPI inflation with eVED being collected via the DVLA with owners estimating their mileage for a year ahead and paying in full, or monthly, with actual mileage confirmed at the end of the year triggering a reconciliation and rebate or additional charge, depending on whether you are under or over your estimated mileage.

The government will consult on how it will asses the mileage but they have ruled out tracking devices for privacy reasons. The revenue from eVED will directly fund road repairs.

Electric Car Grant

The Electric Car Grant has received a further £1.3bn in funding to extend the scheme through to financial year 2029/2030. The grant applies to electric cars  that cost £37,000 or under if eligible. More information on the Electric Car Grant and eligibility here.

Benefit-in-Kind

Benefit in Kind changes to the employee car ownership scheme have been delayed until April 2030.

Salary Sacrifice Leases

Although the Chancellor confirmed there will be a cap to salary sacrifice schemes of £2,000 per year, this does not apply to electric cars leased via salary sacrifice. There are no planned changes to this scheme.

Charging Infrastructure

An additional £200M is being invested into the charging infrastructure, with £100M added to the £400M announced in the 2025 Spending Review, to support the installation of home and workplace chargers. The other £100M will fund a scheme for local authorities to train specialist staff to accelerate the rollout of public chargers.

Additionally, a consultation on the cross pavement EV charging is launching to help homeowners without driveways to access to a home charger.

The government will also review the cost of public chargers with an aim to lowering costs for consumers. The review starts in Q1 2026, concluding in Q3 of the same year.