2026 Autumn Budget Announcements

The 2026 Autumn Budget outlined the UK Government’s fiscal response to continuing economic turbulence, with a promise to provide some breathing space against the cost of living as well as the cost of doing business, while backing British business to unleash the innovation and growth that will enable the country to tackle the big challenges it faces on energy, national security and housing. 

For motorists and fleet operators, the key take away is that the Government is seeking to offer certainty, with the announcement of company car tax rates for 2030/31 and key implementation plans for the introduction of eVED (electric Vehicle Excise Duty) in April 2028. There’s also some relief against the rising cost of fuel with the extension of the temporary fuel duty cut until July 2027 and increased Approved Mileage Allowance Payments for those driving their own cars and vans for work.

The Government has further pledged that, from Spring 2027, £100 million will be provided over two years to reduce the cost of local, lower-powered public charging, while a new taskforce considers how to enable drivers to use their domestic electricity tariff at local, lower-powered public charge points.

We have summarised the changes relating to the vehicle leasing industry and how these could impact you.

Where a CO2 emissions figure is not a whole number, it should be rounded down to the nearest whole number. If an electric range figure is not a whole number, it should be rounded up to the nearest whole number. 

All cars propelled solely by diesel are subject to a 4% supplement unless they meet the Real Driving Emissions Step 2 (RDE2) standard. However, the maximum appropriate percentage cannot exceed the maximum rates noted above. 

Due to the re-homologation of plug-in hybrid electric vehicles (PHEVs) under the Euro 6e-bis standards, the CO2 emissions of many PHEVs will increase. To mitigate the impact of these changes, a temporary tax easement will apply, retrospectively from 1 January 2025 where: 

• a car was first registered on or after 1 January 2025 and before 5 April 2028; 

• a car’s CO2 emissions figure is 51 g/km or more; 

• a car was not registered under the Euro 6d-ISC-FCM or Euro 6e standards; and  

• a car’s electric range figure is 1 or more. 

For a company car made available on or before 5 April 2028, the easement will apply subject to transitional arrangements until 5 April 2031. 

This change will also reduce the Class 1A NIC payable by employers.

Capital Allowances provide tax relief on the costs of capital assets, such as cars and vans, in place of commercial depreciation on which tax relief is not available.

Capital Allowances are claimed either over a number of years via writing down allowances (“WDAs”), or all at once via a first year allowance (“FYAs”), with excess relief being repaid over a number of years after the sale of the vehicle by the business. 

On 1 January 2026, a 40% first year FYA was introduced for main-rate capital expenditure, including vans and assets purchased for lease. From 1 January 2027, the main-rate FYA will increase to 50%.

In April 2026, the main rate of WDA was reduced from 18% per year to 14%. From 1 April 2027, the WDA will be reduced by a further 2%, to 12% per year to compensate for the increased FYA.

There was no announcement regarding the 100% FYA for zero-emission cars and electric vehicle charge points. However, it’s anticipated that this incentive will cease after 31 March 2027. 

^1. _{Registered on or after 1 March 2001 and not exceeding 3,500 kg.} 

^2. _{Registered between 1 March 2003 and 31 December 2006 and not exceeding 3,500 kg.}

^3. _{Registered between 1 January 2009 and 31 December 2010 and not exceeding 3,500 kg.} 

In 2025, the Government set out plans for a new eVED, or mileage tax, for electric and plug-in hybrid cars.

It proposed that, from April 2028, battery electric cars will be subject to a road charge of 3 pence per mile, with a reduced rate of 1.5 pence per mile applying to plug-in hybrids; these rates will increase each year in line with inflation from 2029.

Announcing these proposals, HM Treasury set out that the average EV owner, driving 8,000 miles per year, will pay an additional £240 per year in 2028/29.

Following the consultation undertaken in 2026, key implementation measures have now been announced including the:

-            introduction of a mileage estimation tool to support motorists, with proof-of-concept work already underway to assess how features such as benchmarking could help motorists to estimate their mileage, ahead of the launch of eVED in April 2028;

-            development of an opt-in system, called ‘eVED Connect’, to make use of a vehicle’s in-built connectivity so that motorists do not have to report mileage manually; and

-            roll out of an automated refunds model by 2030, making refunds easier and available in more circumstances, such as when a motorist overestimates their mileage or sells their car.

The Government has also promised to work closely with industry and motoring representative groups ahead of implementation, and make available further guidance for fleet operators later this year.

eVED will not apply to light commercial vehicles, HGVs, and motorcycles, which will initially be exempt.

Fuel duty will remain at the current rate of 52.95 pence per litre until July 2027.

This means the 5 pence per litre temporary cut introduced in 2022, which was due to be reversed from January 2027, will be extended for a further six months, with the planned inflationary increase also being deferred until July 2027.

AMAPs can be paid tax and NIC free to reimburse an employee for business mileage undertaken in their own car or van.

Unlike HMRC’s Advisory Fuel Rates (“AFRs”) or Advisory Electricity Rates (“AERs”), AMAPs are designed to cater for both mileage and general vehicle expenses. Hence, they will cover items such as fuel, oil, servicing, tyres, road fund licence, insurance and depreciation, but they are not designed to cover ancillary journey related expenses such as parking or tolls.

In May 2026, a temporary 10 pence per mile increase was introduced for cars and vans, taking the rate from 45 pence per mile to 55 pence per mile for the first 10,000 business miles driven each tax year; this increase was backdated to 6 April 2026.

The 2026 Budget made this permanent, but it has been augmented by a 10 pence per mile increase for those driving greater distances, with the rate above 10,000 business miles being increased to 35 pence per mile from 6 April 2027.

According to HMRC, an employee driving 15,000 business miles a year would benefit by up to £300 in additional tax savings as a result of these changes.

For NIC purposes, the rate has been permanently increased to 55 pence per mile for all business mileage. The 10,000-mile threshold no longer applies.

Cars made by manufacturers who have not a set science-based target are not eligible.

For a list of cars that qualify for the grant visit Gov.UK.

Welcoming the publication of independent review of the cost of charging EVs on the public network, the Government has announced the establishment of a taskforce to explore allowing drivers to use their domestic electricity tariff at local, lower-powered public charge points.

Given the time it will take to consider this complex proposal, the Government has announced that £100 million will be made available over the next two years to reduce costs for local, lower-powered public chargers.

With effect from Spring 2027, this is expected to save the average EV driver, without home charging and who charges on-street, around £150 per year.