2026 Autumn Budget Summary

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, whilst 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 takeaway 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 in 2028, coupled with the offer of 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.

We have summarised the changes relating to the vehicle leasing industry and how these could directly affect the automotive sector and fleet industry.

Company car tax

The confirmation that company car tax rates will rise by just 1 percentage point across all emission bands in 2030/31 will give fleet operators much-needed long-term visibility to plan corporate replacement lifecycles and the EV transition.

The appropriate percentage for zero-emission cars will increase from 9% to 10%.

Meanwhile the percentage for plug-in hybrid cars emitting 1 to 50 g/km will rise from 19% to 20%, with the percentage for all other emission bands increasing by 1 percentage point, subject to an increased maximum of 40%.

Toby Poston, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), said: The Chancellor has listened to the fleet sector and the decision to provide greater certainty over future benefit-in-kind rates is a positive outcome, even if it is just one more year of clarity. We have seen just how effective this policy has been in driving EV uptake, keeping rates competitive will give businesses and drivers the confidence to continue investing.

Meanwhile, noting that the announcement of BiK rates for 2030/31 provides a high degree of certainty over a typical four-year cycle and beyond, Paul Hollick, chair at the Association of Fleet Professionals (AFP), added: The tax increase is as minimal as we could have hoped, maintaining the low BIK incentive for drivers for the next five years, something we believe is important to ongoing fleet electrification.

These changes will also increase the Class 1A NIC payable by employers.

Company van and fuel benefit tax

The scale charges for these benefits will increase in line with inflation from 6 April 2027, as follows:

the car fuel benefit charge will be £30,200 (up from £29,200);
the van benefit charge will be £4,310 (up from £4,170); and
the van fuel benefit charge will be £825 (increased from £798).

These changes will also increase the Class 1A NIC payable by employers, where applicable.

Capital allowances

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 (FYA) 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% 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 percentage points, to 12% per year to compensate for the increased FYA.

Whilst acknowledging the increase of FYAs, Toby Poston of the BVRLA said: Less welcome is the move to reduce writing down allowances for cars again, lowering them from 18% to 12% over the last two years. It is an expensive change that will hit those who have invested in low- and zero-emission cars.

Meanwhile, with no announcement being made regarding the 100% FYA for zero-emission cars and electric vehicle charge-points, after many years it’s anticipated that this incentive will cease to be available after 31 March 2027. As leasing companies have not been able to claim FYAs for many years, this means that an advantage currently given to those fleets that buy their cars will be withdrawn, thereby making leasing even more financially compelling.

Vehicle Excise Duty (VED)

First-year and standard rates

The first-year and standard rates for cars registered from April 2017 will increase in line with inflation from 1 April 2027, with the exception of zero-emission cars for which the first-year rate has been frozen at £10.

The annual charge for most vans, and cars registered before 31 March 2017, will also rise in line with inflation from April 2027.

Expensive car supplement

The VED expensive car supplement will also be uprated in line with inflation from 1 April 2027, rising from £440 to £460.

The expensive car supplement thresholds will remain unchanged, being:

a list price exceeding £50,000 for zero-emission cars; and
a list price exceeding £40,000 for all other cars.

The expensive car supplement applies from year two for five years, following the first year’s registration.

Electric Vehicle Excise Duty (eVED)

In 2025 the government set out plans for a new Electric Vehicle Excise Duty (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 ppm, with a reduced rate of 1.5 ppm 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:

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
rollout 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.

Toby Poston, chief executive at the BVRLA, welcomed the practical improvements to eVED but said that making a bad tax easier to administer doesn’t make it a good tax reiterating the association’s view that eVED remains the wrong tax at the wrong time.

And the National Franchised Dealers Association (NFDA) warned that a mileage-based system could discourage motorists from making the switch to electric vehicles, with its chief executive Sue Robinson saying The 2026 Budget was a missed opportunity. The proposed mileage-based EV tax risks making electric vehicle ownership less attractive, leading to it to becoming non-workable. Adding further costs and complexity for motorists could undermine progress towards wider EV adoption.

Fuel duty

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

This means the 5p 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.

Ben Fletcher, chief executive at Logistics UK, said: The Government’s decision to retain the 5p per litre cut in fuel duty is a wise decision which will help keep trade moving, support growth across the economy and avoid adding further inflationary pressures.

However, the AA argued that the Government had missed a major opportunity to support the commercial transport sector, warning that the freeze until July 2027 just delays an inevitable financial shock for motorists, whilst the RAC said that while drivers may breathe a mild sigh of relief knowing that fuel duty isn’t about to suddenly go up, many are likely to be disappointed the Chancellor didn’t go further to support them.

Approved Mileage Allowance Payments (AMAPs)

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 ppm increase was introduced for cars and vans, taking the rate to 55 ppm for the first 10,000 business miles driven each tax year; this increase was backdated to 6 April 2026.

In the 2026 Budget, this increase has been made permanent and augmented by a 10 ppm increase for those driving greater distances, with the rate above 10,000 business miles being increased to 35 ppm 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.

Commenting upon this historic increase of AMAPs, IAM RoadSmart said the changes to AMAPs, along with the freeze on fuel duty, would provide critical support for working drivers: These pragmatic moves by the Chancellor will be well received by millions of motorists who depend on their vehicles for work, family commitments and everyday journeys.

For NIC purposes the rate has been permanently increased to 55 ppm for all business mileage, as the 10,000-mile threshold does not apply.

Public EV charging support

Welcoming the publication of an independent review of the cost of charging electric vehicles (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.

Coming into 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.

National Minimum Wage (NMW)

The NMW is to be uplifted to £13.21 per hour from 1 April 2027; a rise from £23,132 per annum to £24,042 for someone working 35 hours per week.

Whilst generally being good news for the lower paid, it could affect the ability of some employees to participate in salary sacrifice schemes.

Salary sacrifice

Whilst the Red Book included a heading that referred to ULEV salary sacrifice reform, no change was actually proposed, with HM Treasury later confirming to the BVRLA that the reference was an administrative error, a confirmation that will be welcomed by the automotive sector.

Conclusion

Transport is key to the government’s clean energy mission, and the transition to EVs remains crucial to decarbonising transport as well as supporting growth and productivity across the UK.

With around 2.3 million electric cars already on our roads the government continues to commit to phase out new petrol and diesel cars by 2030, and to ensuring that all new cars and vans sold in the UK from 2035 will be zero emission. However, with the precise pathway to achieving that commitment still to be determined via the ongoing review of the ZEV Mandate, the Budget has done little to offer the degree of clarity that fleet operators and the wider automotive sector crave.

Toby Poston, chief executive at the BVRLA, noted that the Budget gets some important things right adding that the priority now must be to build on what is working, rather than risk undermining it.

Meanwhile, although welcoming the confirmation of BiK tax rates for 2030/31, and the clarity this will bring, Paul Hollick, chair at the AFP noted that There were some other positive measures, though nowhere near as eye-catching. The fuel duty freeze is welcome but had been well signposted and offers only short-term relief, while increases in grey fleet casual mileage allowances will suit some drivers but could encourage the use of older, higher-emission cars -- an outcome fleets will be keen to avoid.

Looking for greater clarity for the AFP’s members, Mr Hollick commented that Key areas where our members want more information and action from the government -- the ZEV mandate and eVED -- were largely outside the scope of the Chancellor today. Especially, the AFP wants a greater commitment from the government to engage with fleet operators to better understand the impacts and implications of the eVED tax proposals and resolve a number of key outstanding issues.

Rounding off his analysis of the Budget, Mr Hollick concluded The overall tone of the Budget was about the government setting out its priorities to support people while the cost of living continues to rise. This is a laudable aim but there is an argument more attention could have been given to the needs of business. Many fleets find themselves under growing financial pressure and more help would’ve been gladly welcomed.