The Autumn Statement: what it means for motorists

The road ahead following the Autumn Budget 2024

Got money on the mind? You’re not the only one.

The ever-highly-anticipated Autumn Budget was delivered this week by the new Labour government, and lays out a series of measures to – in the words of the government themselves – ‘fix the foundations of the economy and deliver change’.

Which, of course, has far-reaching implications for both the economy and our own pockets.

According to the Autumn Budget, the aim is to make public finances more sustainable, support public services (including reducing NHS waiting lists), and boosting capital investment to unlock long-term growth.

But how will this affect motorists?

First, let’s cross off some frequently asked questions about the Autumn Statement itself. Skip forward if you already have a basic understanding of the Autumn Budget and why it exists.

It’s important to acknowledge that we know each and every Budget has far-reaching implications beyond just our humble industry. But in order to provide the most valuable update, for now we’re focusing on what the Autumn Budget means for motorists.

When is the Autumn Budget?

Rachel Reeves, the UK’s Chancellor of the Exchequer, presented the annual Autumn Budget on Wednesday 30th October 2024.

What is an Autumn Budget?

The Autumn Budget – or Autumn Statement, as it was last year – is an update on the government’s economic forecast and supporting strategies.

What is in the Autumn Budget 2024?

The Autumn Budget reviews data on the current state of public finances as provided by the Office for Budget Responsibility (OBR) and the government’s own reflection on its ability to meet their financial objectives.

It considers the current state of the UK economy, and proposes future changes to legislation to tackle issues and support growth.

This all forms the Economic and Fiscal Outlook (EFO) which is published twice a year, in the spring and autumn.

This October budget was the first given by the new Labour government, after they won the election back in July. 

And the first in UK history to be delivered by a woman.

How does the Autumn Budget affect me?

Both the Spring Budget and Autumn Statement/Budget can impact everything from income and corporation tax, commodity duties, wages and benefits, to local authority spending and industry funding or initiatives.

It affects us differently depending on our own financial circumstances, where we live and work, the public services we use and where we spend our money.

The aim is to achieve better economic health through reduced borrowing, controlled inflation and GDP growth. Each budget is different, and outlines specific strategies and targets for the upcoming fiscal year based on the most prominent economical issues at that time.

What the Autumn Budget means for motorists

It’s been a tricky few years for many of us, with basic costs having risen and day-to-day life feeling rather expensive.

The automotive industry as a whole, as well as anyone who drives a car, has not been exempt from this trend.

But has the latest Autumn Budget offered any lifelines?

Autumn Budget on fuel duty

Good news here – Rachel Reeves has once again kept the freeze on fuel duty, as well as the five pence-per-litre cut that was announced back in spring 2022.

Despite the rumours flying around that fuel duty would rise by up to seven pence-per-litre, Reeves said in her statement that increasing the rate wouldn’t be the right thing to do for working people, despite the £3 billion a year it could raise.

Fuel duty has been frozen at 57.95 pence-per-litre since 2011. With the discount, fuel duty currently stands at 52.95 pence-per-litre, and will stay at that rate for the next year.

On average, this is a saving of about £59 a year for drivers. Not a huge saving, but when the pennies are pinching, every little bit really does help.

Autumn Budget on EV incentives and tax rates

The government has been under increasing pressure from the motor trade to do more to incentivise people into electric cars.

In the Autumn Budget, Rachel Reeves confirmed that fully electric cars will keep their favourable Benefit in Kind (BiK) tax rates for company car drivers. They will, however, increase by 2% each year in 28/29 and 29/30 to reach a high of 9%.

This represents a big saving for anyone looking for a electric business lease, with EVs often attracting a much smaller monthly BiK rate than their combustion engine counterparts which will be penalised more heavily going forward.

However, as we already knew, electric cars will have to pay Vehicle Excise Duty (VED – commonly known as road tax) from April 2025.

EVs will be subject to a much nicer first-year tax rate than petrol or diesel though, with zero-emission vehicles paying just £10.

But rather than incentivising people into EVs, it looks like Reeves is trying to discourage people away from combustion engine cars, with substantial increases in VED rates and an increase in BiK for hybrid cars coming in 2028.

From April 2025, cars emitting less than 50g/km of CO2 (plug-in hybrids) will pay £110 for the first year, cars emitting 50-75g/km of CO2 will pay £130, and cars emitting over 75g/km of CO2 will see their first-year tax rates double.

After the first-year charge, all cars (combustion, hybrid and electric) will pay the standard rate, currently set at £190 for 2024, though this could change before April 2025.

Although a potential review was teased, there was no change to the fact electric cars will also become liable for the ‘luxury car’ tax, which sees all vehicles with a list price of over £40,000 having to pay an additional £410 for years 2-6 of ownership. EVs were previously exempt, but will have to pay this from April 2025.

Autumn Budget on EV charging

Unlike previous years, the Chancellor has addressed one of the biggest barriers to electric car ownership in this year’s budget: how to charge it.

Rachel Reeves has announced a £200 million investment into EV charging infrastructure, which includes giving money to local authorities to install on-street charging points, which will be a massive help to those who want to drive electric, but don’t have private off-street parking.

The budget did not set a target for the number of new charging points installed, but the government is still working towards a target of 300,000 stations across the country by 2030.

Autumn Budget on potholes

Even more good news for those of us who frequently have to drive down potted roads, playing real-life Mario Kart in attempt to not blow a tyre in a hole that is deceivingly deep.

The government has pledged an additional £500 million to help repair our roads from next year.

This is actually £180 million more than was initially thought, with initial reports thinking that £320 million would be invested, with the money coming from the deferred A27 bypass scheme in West Sussex.

But it keeps to Labour’s manifesto pledge to repair one million potholes a year, and should help councils tackle the growing problem.

Summary

Once again, the Autumn Budget is a bit of a mixed bag for drivers.

The investment into EV charging and pothole-fixing will likely come as a relief for many, and the freeze to fuel duty was an unexpected surprise. But there are rises in VED coming for us all next year, no matter how your car is fuelled.

This is an important consideration if you run a lease car, as your contract will include road tax at the prevailing rate only, and you will be billed for any uplift.

But with the ZEV mandate and the 2035 ban on the sale of new petrol and diesel cars looming (and still a chance that this Labour government could pull the deadline back again to 2030), the government is under pressure to incentivise EV uptake.

And it is good news if you are looking at electric driving, with both first-year VED and Benefit in Kind tax for company car drivers being much cheaper than combustion alternatives.

It’ll certainly be interesting to see what happens next year, with the Spring Budget.

Here’s to more good news!

Other important updates from the Autumn Statement

Of course, the impact of the Autumn Statement is not limited to our vehicles and roads. 

This list isn't all-encompassing, but here are some of the other top changes coming as a result of the latest proposal:

• Employers' National Insurance contributions are being raised 1.2 percentage points from April 2025
• Personal tax thresholds will be increased in line with inflation from 2028-29
• Capital Gains Tax will be increased and the inheritance tax threshold freeze will be extended to 2030
• National Living Wage, the legal minimum for over-21s, will increased to £12.21 in April 2025
• Taxes on alcohol will rise in line with the Retail Price Index, but there will be a 1.7% cut to draught duty
• VAT will be brought in one private school fees from January 2025
• The government will spend £5bn on housing investment in 2025-26