2025 UK budget: Fuel freeze, new road taxes, and a million potholes promised

The new budget has motorists riding a mix of relief and caution.

2025 UK budget for motorists

Angel Sergeev

By: Angel Sergeev

Nov 11, 2024 at 4:07am ET

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The UK's Chancellor of the Exchequer, Rachel Reeves, unveiled her 2024 Autumn Budget with some unexpected but wallet-friendly news for motorists: a freeze on fuel duty and significant road tax updates aimed at driving Britain towards greener travel. The budget has sparked relief, intrigue, and perhaps a little alarm among drivers and environmental advocates alike. The RAC summarised what the new budget means for drivers in the United Kingdom.

Fuel duty freeze: good news at the pump

Much to the relief of drivers (and contrary to much speculation), Reeves has hit the brakes on fuel duty hikes, choosing not to raise the price at the pump for at least another year. This means that the 5p-per-litre cut implemented by the previous government in 2022 will stay in place, keeping fuel duty steady at 52.95p per litre.

In a nod to the nation’s cost-of-living challenges, Reeves remarked, “While the cost of living remains high and with global uncertainty on the rise, increasing fuel duty next year would be the wrong choice for working people.” For the many who feared an increase, this decision has led to a collective sigh of relief. The RAC’s head of policy, Simon Williams, even chimed in, celebrating the move as a win for the “millions of households” who rely on their vehicles to get around.

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Road tax (VED) shakeup: bad news for hybrids?

When it comes to vehicle excise duty (VED), Reeves’ budget sends a clearer message: it’s time to go green or pay more. For the first time, VED will take a bigger bite from hybrid vehicle owners, with the tax on low-emission cars (1-50g/km of CO2) skyrocketing from £10 to £110 in the first year starting in 2025.

Higher emissions? Higher costs. New cars emitting 51-75g/km of CO2 will now face a £135 first-year tax (up from just £30), while traditional combustion engines will see their rates double. Reeves’ plan essentially turns the road tax into an environmental nudge, rewarding zero-emission cars and punishing their fuel-guzzling counterparts. If you’ve got a hefty BMW X5, brace yourself for an additional £2,745 in your first-year tax bill.

Infrastructure and industry support: More potholes, more EV chargers

For everyone who’s had enough of dodging potholes, Reeves has earmarked a £500 million boost for road maintenance from April 2025. This extra cash is expected to tackle a million potholes per year – though Williams of the RAC urged local councils to focus on preventive measures, warning that merely filling potholes might be a short-lived solution.

To keep up with the nation’s electric shift, the budget also sets aside £200 million for expanding EV charging networks across England. However, private buyers might still feel a bit neglected; no new incentives have been offered to accelerate EV adoption.

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Pump Watch: Fuel prices in the spotlight

In a nod to transparency, the government announced it will roll out the long-awaited “Pump Watch” scheme by the end of 2025. This fuel price monitoring system will require mandatory publication of prices at the pump, aiming to keep providers honest and help drivers find the cheapest fuel nearby. Williams calls it a “fantastic” win, pointing out that it should bring real savings to customers as wholesale prices fluctuate.

In short, Reeves’ budget has motorists riding a mix of relief and caution. While the fuel duty freeze provides immediate relief, the road tax changes and promises for future green investments paint a picture of a future Britain where drivers will be nudged, prodded, and perhaps eventually forced into the electric fast lane.

Source: RAC

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