Chancellor John Healey has delivered his Autumn Budget, confirming a fuel duty cut and an extension of the reduced VAT rate on home electric car charging, yet millions of motorists are expected to be disappointed by three key measures that were left unchanged.
The Budget prevents a planned 5p rise in fuel duty and extends Andy Burnham's VAT cut on domestic electricity—which has reduced home EV charging costs—until July. However, drivers without off-street parking and those facing high fuel prices still feel overlooked.
Public Charging VAT Stays at 20%
The reduction of VAT on home electricity from 5% to 0% has benefited EV owners with driveways or off-street parking, but millions without this access are forced to use public charging bays, where VAT remains at 20%. Public charging costs around 50p per kWh compared to just 7p per kWh at home, widening the gap for urban EV adopters.
AA President Edmund King said: "The Chancellor has missed the chance to help accelerate the transition to electric cars by retaining the 20% VAT rate on public charging. Around two fifths of households do not have any form of dedicated off-street parking, and retaining the difference in VAT rates only widens the Pavement Tax."
Iain Reid, Global Content Director at Carwow, echoed the call for VAT on public charging to be reduced from 20% to 5% to align with home charging, while Ben Nelmes, CEO at New AutoMotive, said it was "not fair" that those unable to charge at home must pay significantly more for electricity.
Pay-Per-Mile Fees Confirmed for 2028
The Treasury's Budget document confirms that Rachel Reeves' pay-per-mile car tax plan will proceed, introducing a mileage-based charge for electric and plug-in hybrid cars from April 2028 under the Electric Vehicle Excise Duty (eVED) system. The 3p per mile charge has drawn criticism from industry figures.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), said: "The 2026 Budget was a missed opportunity. The proposed mileage-based EV tax risks making electric vehicle ownership less attractive, leading to it to be becoming non-workable. Adding further costs and complexity for motorists could undermine progress towards wider EV adoption."
Fuel Duty Frozen But Prices Remain High
While the Chancellor stopped a planned fuel duty price hike, petrol and diesel owners still face sky-high costs, with diesel rates recently exceeding previous all-time highs and still close to £2 per litre. The Government has benefited from higher VAT revenue as fuel costs soared, but no cuts have been made to lower prices.
Steve Gooding, director of the RAC Foundation, said: "Delaying a planned hike in fuel duty is welcome, but falls some way short of actually making the cost of refuelling cheaper. Meantime, the Treasury will still pocket getting on for half of everything paid on the forecourts. The war in the Gulf has already cost drivers an extra £10 billion and it unfortunately looks set to cost billions more in the months ahead."
