Fuel duty freeze + VED changes | How will the Autumn Budget 2024 affect drivers?
This year’s autumn budget is being touted as one of the most important in recent years. There’s a new government, and Chancellor Rachel Reeves has already hinted that there’ll be some big changes.
So, how will the first Labour budget in 14 years affect motorists? Below, we’ve taken a look at the most significant automotive-related announcements the Chancellor made.
Fuel duty frozen
Rachel Reeves confirmed that the 5p duty cut will remain in place, and the tax will be frozen for at least another year. This somewhat unexpected announcement should give motorists a boost; if the 5p cut and inflation-based rise had come into force, it would have added around 7p onto the price of a litre of fuel.
She told MPs that ended the fuel duty cut would be the wrong choice. She commented: “I have concluded that in these difficult circumstances while the cost of living remains high and with a backdrop of global uncertainty increasing fuel duty next year would be the wrong choice for working people.
“It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too. There will be no higher taxes at the petrol pumps next year.”
Read more about changes to electric vehicle VED from 2025
Road tax (VED) & Company car tax
Road tax (VED) will rise in line with inflation next year, as is the case every April. However, Reeves highlighted that she plans to maintain incentives for people to choose EVs by “increasing the differential between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025”.
That said, we already know that the £0 VED (Band A) incentive for electric vehicles is coming to an end, with all EVs liable to pay a new standard £190 rate from 1 April 2025. This means that road tax for petrol and diesel models may also increase if Reeves plans to “increase the differential”.
Reeves also confirmed that the current BiK (Benefit in Kind) rate for company car drivers will remain at 2% for EVs. This rate was due to expire in 2025, but it’s now been extended until 2026.
Pothole and infrastructure repairs
Away from fuel duty and VED, the Chancellor also confirmed that there will be £500m set aside in this year’s budget to focus on ongoing pothole and infrastructure repairs. Reeves said: “For all too long, potholes have been a visible reminder of our failure to invest as a nation. Today that changes.
“With £500m increase in road maintenance budgets next year, more than delivering on our manifesto commitment to fix an additional one million potholes each year.”
Reeves also confirmed a further £650m would go towards funding improved connections in rural areas of the UK.
Industry reaction
We’ll bring you the latest industry reaction from across the automotive landscape as we hear it. If you want to read more of the latest automotive news, click here.