Budget 2026 for drivers: fuel duty frozen to July, eVED fleshed out, £100 million for on-street charging

The Budget has frozen fuel duty again, published the detail behind the per-mile electric car charge arriving in 2028, and put £100 million into the cheapest end of the public charging network. For drivers, the pattern across all three is the same: nothing gets more expensive in the next few months, and several costs that were scheduled to rise have been pushed back.

Fuel duty held at 52.95p until July 2027

The 5p cut introduced in 2022 was due to be unwound, and the RAC had expected a 5p rise by March 2027. Instead the freeze runs to July 2027, with the increase deferred to 1 July, when duty rises to 57.95p a litre and is then uprated with inflation. From 1 April 2028, fuel duty rates will be uprated annually in line with the retail prices index.

The freeze is long standing rather than new. Fuel duty has not risen in cash terms for 17 consecutive years, a point the RAC makes alongside the note that a freeze only stops things getting worse. Its senior policy officer, Rod Dennis, said drivers may breathe "a mild sigh of relief" that duty is not going up, while many will be disappointed the Chancellor did not go further. The RAC's research published yesterday found two-thirds of drivers cutting other spending to cover fuel, with a narrow preference for a VAT cut over a duty cut. The Chancellor rejected calls to reduce VAT on fuel.

Business mileage rates fixed higher

The tax-free approved mileage rate for the first 10,000 business miles has been fixed permanently at 55p, after a temporary rise from 45p earlier in the year. From April 2027, the rate for mileage above 10,000 rises from 25p to 35p. The Treasury says a driver covering 15,000 business miles will save up to £300.

That change matters to anyone who uses their own car for work and is reimbursed by their employer, and it is the one Budget measure in this group that puts money back into drivers' hands rather than deferring a cost. The Autotrader summary of the Budget sets out the two-tier structure.

eVED: 3p a mile from April 2028, with the admin detail added

The Electric Vehicle Excise Duty (eVED), announced in last year's Budget and consulted on since, will charge 3p a mile for battery electric cars and 1.5p for plug-in hybrids, on top of vehicle excise duty, from April 2028. It applies to cars already on the road as well as new ones.

This Budget added the parts that make a self-reported mileage tax workable. A mileage estimation tool will launch with the scheme, an opt-in "eVED Connect" system will use a car's built-in connectivity to report mileage without manual submission, and an automated refunds model is promised by 2030 for drivers who overestimate or sell the car mid-year. Fleet guidance is due later this year, according to Fleetworld's read of the red book.

The fleet industry's objection has not changed. Toby Poston, chief executive of the British Vehicle Rental and Leasing Association, welcomed the practical improvements and said that making a bad tax easier to administer does not make it a good tax. We set out how the charge works in our eVED explainer.

Vehicle excise duty rises with inflation

VED rates for cars, vans and motorcycles will rise with the retail prices index from April 2027. For a car registered on or after 1 April 2017, the standard rate is expected to rise by £5, to about £205. Electric cars pay the standard rate too, which is where the guide to what EV owners pay is worth a read before budgeting for next year.

£100 million for the cheapest public chargers

The Budget's charging measure targets the part of the network that competes with a home charger rather than a motorway stop. From spring 2027, £100 million will be provided over two years to cut prices at local, lower-powered public chargers, typically the ones on residential streets where a car can be left for hours or overnight. The government says that is around a third of the current network, and that the support will save drivers an average of about £150 a year.

The scheme follows an independent review by Philip New, published alongside the Budget, which found that average prices at lower-powered public chargers have risen 69% in real terms since 2021, and at higher-powered chargers by 94%. The review's recommendation, that drivers should be able to use their domestic electricity tariff at local public chargers, is being taken forward through a "tariff porting" taskforce. Under that model a driver would pay their home supplier for the electricity used at a nearby charger, plus an access fee covering installation and operation.

The Treasury has not said how the £100 million will be delivered, whether through charge point operators, a delivery body or local authorities, and the Department for Transport will set out next steps. What it has not done is cut VAT on public charging, which stays at 20% against the zero rate now applied to domestic electricity in Great Britain, a gap the RAC and the charging industry have both criticised. The government's own announcement also restates the wider context: 124,000 public charge points, up 7.4% year on year, and around a third of households without off-street parking.

What it adds up to

A driver filling up in November pays the same as in October and will keep paying it until next summer. A driver charging at home keeps the zero rate on electricity, extended to July 2027, which is the same measure that has made home charging unusually cheap this autumn. A driver relying on the street gets a promise of cheaper local charging from 2027, a date that sits awkwardly with the per-mile charge starting in 2028.