On 26th November, Rachel Reeves delivered her budget. Here, we will examine the budget and the impact that this will have on businesses and their drivers.
1. EV Tax
Before the budget, it was widely reported that an Electric Vehicle (EV) tax would be introduced at a rate of 3p per mile. This change has been confirmed to take effect from April 2028. The new legislation means EVs will be charged at 3p per mile and Plug-in hybrid vehicles (PHEVs) charged at 1.5p per mile. The Office for Budget Responsibility (OBR) has said that on average, EVs drive an average of 8,500 miles, and this will incur an additional annual cost of £255.
Although the OBR provided a conservative estimate of mileage per vehicle, the annual cost for EVs used in businesses will be higher. For example, a delivery driver may travel between 500 and 1500 miles each week. This could lead to an additional weekly cost of between £15 and £45 for business use. Over the year, this adds up to approximately £780 to £2,340 per vehicle.
*Prices have been worked out for full EV vehicles, costing 3p per mile. For a PHEV, the cost will be halved.
While it has not been confirmed how drivers will pay for the eVED, it is believed that drivers will not require trackers in cars but will estimate how many miles they are going to drive when they pay their VED (commonly called road tax). If at the end of that period you pay too much, you will receive a refund. If you underestimate, you will have to pay the difference. Your mileage can be checked during your annual MOT.
However, many feel that with the additional charges, what was once seen as an environmentally friendly and cost-effective alternative to the internal combustion engine (ICE) may now hinder the transition to electric vehicles (EVs).
Speaking in the House of Commons, Reeves stated that “Because all cars contribute to the wear and tear on our roads, I will ensure that drivers are taxed according to how much they drive, not just by the type of car they use.”
2. Vehicle Excise Duty
In April 2025, Vehicle Excise Duty (VED) was introduced on all vehicles, including zero-emission vehicles (ZEVs) that were previously exempt. As announced in this budget, from April 2026, there will be an increase in the VED Expensive Car Supplement. This has risen from £40,000 to £50,000.
3. Fuel Duty
The 5p per litre cut in fuel duty has been frozen for the remainder of 2025; however, as of September 2026, this will rise annually by the RPI measure of inflation. For the average driver, filling up their vehicle will cost approximately £3 more.
Closing Thoughts
As costs rise for both motorists and businesses, there are steps you can take to alleviate them. Consider obtaining a fuel card from Cambrian Fuel Card Services. We offer 8 national fuel cards from five main suppliers for you to select from, including Shell, Texaco, Esso, Keyfuels, and UKFuels. By using a fuel card from us, you benefit from fixed weekly pricing with no extra or hidden fees; you only pay for the fuel you consume! Additionally, we provide access to a portal that allows you to monitor and manage your fuel expenses. Being a VAT-compliant system, you can also reduce administrative costs, and your drivers will no longer need to submit receipts to you.
