There were several new policies affecting motorists in the Autumn Budget
Treasury minister Dan Tomlinson spoke about a tax affecting motorists (Image: Parliament TV)
The Government has provided an update on an upcoming change to a tax on motorists. There were major changes to taxes on drivers announced in the Autumn Budget, including a new pay-per-mile tax for EVs and plug-in hybrids, which will come in from April 2028.
Ministers also extended the temporary 5p per litre cut in fuel duty, with the current rate frozen until September 2026. This means there will be on increase in line with inflation for the 2026/2027 tax year.
The cut will gradually be reversed, returning to March 2022 levels by March 2027. This will happen with a 1p increase in September 2026, a 2p increase in December 2026 and then another 2p increase in March 2027.
From April 2027, fuel duty will rise annually in line with inflation. Liberal Democrat MP David Chadwick asked the Government what impact the Government had made of the increase in fuel duty “on household living standards”.
Treasury minister Dan Tomlinson issued a response. He said: “At Budget 2025, the Government announced continued support for people and businesses by extending the temporary 5p fuel duty cut until the end of August 2026. Rates will then gradually return to early 2022 levels.
“The planned increase in line with inflation for 2026-27 will not take place, with the Government uprating fuel duty rates by RPI from April 2027. This will save the average car driver £49 next year compared to previous plans.”
He said the Government had set out the estimated impact from its tax changes on household incomes. He shared a link to a document with more information.
The new vehicle pay-per-mile tax for EVs and plug-in hybrids will operate alongside their existing Vehicle Excise Duty. A Government document published as part of the Budget outlined: “While it is fair for EV drivers to contribute for their car usage in the same way as those driving petrol and diesel cars, the Government is committed to ensuring that driving an EV remains an attractive choice for consumers.
“Therefore, the tax paid by EV drivers will be around half the fuel duty rate paid by the average petrol/diesel driver, with a reduced rate for plug-in hybrid drivers. When eVED takes effect in April 2028, an average EV driver will pay around £240 per year or £20 per month.
“Other vehicle types, such as vans, buses, motorcycles, coaches and HGVs, will be out of scope of eVED when it is introduced, with the transition to electric power for these vehicle types being currently less advanced than for cars.”
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