Budget 2025 – the impact on fleet
Posted on 27 Nov 2025
4 min read
The Autumn Budget 2025, delivered this week by Chancellor Rachel Reeves, has seen the announcement of a number of policy changes that could impact businesses operating fleets and individual drivers. Below is our breakdown of what we know so far.
Electric car mileage-based charging
From April 2028, a new mileage-based taxation on electric cars will come into place. This will be charged at 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrid cars. This is in addition to the current Vehicle Excise Duty.
The government predicts that the average EV will travel 8,500 miles in 2028-29, equating to a £255 annual charge.
There is no information yet on how mileages will be collated and applicable charges calculated although there will be no requirement to report where and when miles are driven or install trackers in cars.
The money raised from this will be used to double the road maintenance bill and offer a further £200 million for EV charging points.
Expensive car supplement
The threshold for the Expensive Car Supplement will increase for battery electric cars in April 2026 from £40,000 to £50,000, meaning fewer vehicles will be subjected to the additional £425 annual supplement. No other changes to Vehicle Excise Duty have been announced.
Electric car grant
The electric car grant announced in July, which provides grants of up to £3,750 for new battery electric cars will be expanded, with an extra £1.3 billion made available and extending the scheme to 2029/30.
PHEV BIK easement
There will be a temporary easement to Plug-In Hybrid BIK to mitigate the tax charges increasingly significantly due to the new emissions standards. The easement will deem the vehicle’s CO2 emission figure to be 1g/km for the purposes of BIK tax, rather than the figure stated on the vehicle’s registration document. This will have have the effect of reducing the applicable BIK charge for the vehicle.
This will apply from 1st January 2025 to 5th April 2028 and is expected to save PHEV drivers between £35-85million per year for the next 5 years.
Fuel duty
The 5p duty cut will stay in place until September 2026, when a staggered fuel duty increase will begin. This begins with a 1p increase from September 1, 2026, 2p from December 1, 2026, and 2p from March 1, 2027.
ECOS reform pushed back
Changes to Employee Car Ownership Schemes have been pushed back to 2030, when vehicles provided through an ECOS arrangement will become liable for Benefit-in-Kind tax. There are an estimated 80,000 vehicles currently operating under this scheme.
Vans to qualify for capital allowance
LCV fleet operators will benefit from a tax change which introduces a 40% first-year capital allowance for leased vans from 1 January 2026.
The move brings leased assets into the capital allowances regime for the first time and gives leased vans taxing parity with those purchased outright.
Fuel finder
The government’s Fuel Finder open data scheme should go live as early as February 2026 which requires petrol stations to report their fuel prices in real time, with the aim of giving drivers the opportunity to search for the cheapest local fuel. Government figures suggest the scheme could save the average motorist £40 per year.
On the Budget 2025, Sales and Marketing Director Ashley Crookes said:
It’s a mixed budget for the fleet industry with the introduction of the mileage-based taxation scheme for EVs alongside a more generous threshold for the ECS. It will be interesting to see how the pay-per-mile scheme will be implemented and who will be responsible for the collection and reporting of mileages, with lots of external factors to consider. It’s also great to see there has been no policy change on salary sacrifice vehicle schemes, a huge and rapidly expanding product for both Ogilvie and the wider fleet industry. As always, the devil will be in the detail and we look forward to seeing the fuller picture in the coming weeks.
