Budget 2025 analysis
With the Chancellor set to deliver the Budget tomorrow, the UK automotive aftermarket is bracing for updates that could shape costs, skills and stability across the sector. Independent garages, suppliers and service businesses are hoping for measures that ease rising pressures and support the transition to new technologies.
We’ll be gathering industry reaction throughout the week and updating this article as responses come in.
Ahead of Wednesday’s Autumn Budget, Iain Reid, Head of Editorial at Carwow, said:
"It is clear that continued speculation about a potential hike in taxes to be announced in Wednesday's Budget is undermining consumer confidence, and the effects are being felt by dealers across the UK. A remarkable 97% of the UK motor retailers that responded to yesterday's snapshot Carwow survey agreed with the statement: 'Consumer demand for new and used cars has been impacted negatively by ongoing speculation about the potential tax rises to be announced in the Autumn Budget'.
"Consumers and businesses alike crave certainty and, while we saw a 25% uplift, year-on-year, in the overall volume of new and used car enquiries passed to dealers from the Carwow platform during the first three weeks of November, it is clear that this number could have been higher still. We also expect that the boost given to the EV sector by the Electric Car Grant is being squandered, in part, by fears that EVs are going to be hit by punitive new taxes. It must be hoped that Wednesday's Budget announcement will provide much-needed clarity and allow consumers to proceed with car purchases with confidence."
Statement from Mark Field, Chief Executive of IAAF in response to the Autumn Budget
The automotive aftermarket is significantly the largest element of the UK automotive sector, and the budget does nothing to support the thousands of businesses that deliver affordable mobility to the millions of motorists every day.
We’re an aftermarket, not an afterthought and short-term thinking by successive governments has now meant £4bn of grants to sell Electric Vehicles that not everybody wants or can afford. Even more remarkable is this government's plan to charge the ones that do, with a pay per mile tax on EVs. This will further reduce EV adoption.
Instead of dumbing down EV adoption by subsidising the price of cars, we should be supporting businesses and programmes that deliver on the sensible notion that a technology neutral approach to future mobility is the best way to ensure effective consumer choice and affordable motoring.
Marcel Wendt, CTO and Founder at Digidentity said:
EV pay-per-mile
“A move toward road-pricing for electric vehicles is understandable. Fuel duty revenues are falling as more drivers switch to electric, and the Treasury needs a fair way to replace them. But the success of any pay-per-mile system depends on the integrity of the data that underpins it. Mileage information will come from connected-car systems and telematics, which means accuracy, security and privacy have to be built in from the start.
“The wider aftermarket will also feel the effects. Service and repair businesses are already managing an explosion in digital complexity, from vehicle software updates to secure system access. A usage-based tax framework adds another layer of data handling and verification that those businesses will have to support.
“If the Government wants this new model to work fairly and efficiently, it needs to invest in the digital infrastructure and clear technical standards that make data sharing and system access reliable for everyone, not just for manufacturers, but for the independent sector that keeps most of the UK’s vehicles on the road.”
Silent on EV skills / safety
“It’s a serious gap that the Budget says nothing about the skills and safety demands created by the UK’s growing EV fleet. Modern electric vehicles contain high-voltage components and software-driven systems that must be handled with verified expertise. A single mistake during repair can compromise both technician and driver safety.
“The sector is investing heavily in training, but without government-led standards for safe system access and repair verification, the burden falls entirely on workshops. That isn’t sustainable. EV safety depends on a workforce equipped and authorised to work with the technology now entering Britain’s roads at scale.”
Responding to the Autumn Budget, Laurence Vaughan, CEO at Big Motoring World, said:
“It is understandable to look for solutions to make up the financial gap from the emissions-based vehicle excise duty (VED) and fuel duty but introducing additional running costs at this stage could undermine consumer confidence and dampen enthusiasm just as EV adoption is accelerating. Though, it is worth noting that our analysis shows that even with a 3p per mile tax, EVs are around £800 cheaper to run than petrol cars on average.
“Another potential roadblock would be the scrapping of the Employee Car Ownership Schemes (ECOS), through which more than 100,000 cars are sold each year. Removing such incentives could further impact sales and stall progress toward the UK’s net-zero ambitions.”
Autumn Budget delivers higher costs and new EV taxes, with little support for the fleets that keep Britain moving, Paul Holland, Managing Director for UK/ANZ Fleet at Corpay, including UK brand:
“The Autumn Budget has landed and it is every bit as tough as expected. Higher taxes, reduced growth forecasts and a new mileage tax for electric vehicles all point in the same direction. Costs are rising again and the businesses keeping the country moving are being asked to absorb even more pressure.”
“Nothing announced today makes life easier for fleets or small businesses. Fuel duty relief is still absent, with only a five-month freeze before staged increases begin from 2026. Incentives for cleaner alternatives such as HVO are missing. Support to help small firms electrify is nowhere to be seen. Instead, the Government has confirmed a new EV mileage tax from 2028, charging 3 pence per mile for battery electric vehicles and 1.5 pence per mile for plug in hybrids. This is completely the wrong move at the wrong moment. If you increase the cost of running an EV, people will simply delay switching.”
“The Budget also highlights a wider problem: rising taxes across the board. The freeze on income tax thresholds has been extended to 2031, which means higher personal tax bills. That does not just hit households. It pushes up wage expectations and operating costs for every business that relies on drivers, technicians and frontline staff.”
“We must also recognise that lower economic growth has consequences for fleets. Every fraction of a percentage lost means less investment, less confidence and fewer businesses able to modernise their vehicles. Yet the Budget offers no new measures to help commercial operators upgrade vans, adopt cleaner fuels or manage rising energy costs.”
“Without targeted support, EV vans will remain impractical for many small firms. The second-hand EV market will stay weak. Greener fuels such as HVO will continue to be a nonstarter because they are taxed the same as diesel. And now EV taxation risks slowing progress even further. These are practical issues that Government has to confront if it wants a cleaner and more productive transport system.”
“The Government says it wants growth. Growth comes from giving businesses the space and confidence to invest. Fleets and small businesses needed support. Instead, they received higher costs and higher uncertainty.”
Paul Burgess, CEO, Startline Motor Finance, said:
“We completed research this week that showed what dealers want to most see from the used car market in 2026 is improved consumer confidence, so a good way of measuring this Budget is whether it is likely to deliver in that sense. I suspect overall, it could have at least some positive effects. There are potential plus points for car buyers in the shape of higher minimum wage, help with electricity bills and increased child benefit, although balanced against that should be the creeping effect of freezing personal tax thresholds. In general terms, consumer confidence has taken many knocks in recent years and there is some worthwhile help here against a tough economic backdrop.”
Paul Hollick, chair, Association of Fleet Professionals, said:
“This is a Budget with several points of considerable interest for fleets, both in the short and longer term.
“The most immediate news is that fuel duty remains frozen only until September 2026, when it will begin to rise in stages. This is probably unexpected and definitely unwelcome at a time when fleet spending is under pressure. While we welcome the idea of a national fuel finder that will make lower prices easier to access, we strongly urge the Chancellor to rethink.
“Of interest in the longer term is the introduction of pence per mile EV road charging, planned for April 2028. This idea has been mooted ever since fleets started adopting electric cars in large numbers and was widely trailed in the press ahead of the Budget. What is needed now is a conversation across the fleet sector about what we want from such a scheme in terms of its timetable and implementation - a dialogue where we expect the AFP to take a central role.
"Initially, our main concern is that it shouldn’t arrive in a form that could hamper electrification or cause any hesitation among potential business and private EV buyers. We’re looking at a point two-and-a-half years away, which at least creates time and space for serious discussion.
"It is also welcome that electric car grant funding has been increased quite substantially, a measure presumably designed to counter any fall in EV demand caused by road charging. While this scheme is perhaps more directly relevant to retail rather than fleet customers, it’s a positive for everyone if the EV market receives any kind of boost.
“In terms of the wider economy, the Chancellor clearly has a financial hole to fill and has looked to meet that need in ways that are largely designed to be unnoticed by most businesses and households, even while the tax take is increasing. How this impacts on consumer and business confidence remains to be seen."
Steve Horne, CEO, GSF Car Parts said:
“The introduction of a mileage-based tax for electric vehicles from 2028 is a pivotal moment for the UK automotive market. While designed to address falling fuel duty revenues, the OBR’s forecast of 440,000 fewer EV sales over five years signals a slower transition to electrification. For the aftermarket, this means ICE vehicles will remain on the road longer, creating sustained demand for traditional parts and maintenance.”
James Tew, CEO at iVendi, said:
“There has been much noise and anticipation around this Budget and there is quite a lot in there of interest to the retail motor sector. While not arriving until 2028, pay-per-mile road duty could dampen EV demand on one hand while the extension to the new electric car grant is designed to have the opposite effect, which feels like something of a policy fudge.
“However, it’s good news to see that the mooted changes to employee car ownership schemes have been delayed, which could have had a direct effect on dealer recruitment and nearly-new stock supply. Hopefully, the government will work with the industry to arrive at a sensible, long-term solution.
“For consumers, there are also a range of measures that have a give-and-take quality to them - freezing of personal tax thresholds is not good news but the measures to reduce electricity bills and increase child benefit might make some feel as though they have more money in their pockets."
Scott Dawson, CEO of DECTA UK said:
“I really want to be able to offer a contrarian take on the budget, to be able to say that if you read between the lines then actually the consensus is wrong and that things are looking up. Unfortunately, what we got in Parliament, while not nearly as bad as it could have been, was more of the same. There were a lot of small tweaks that might help some people or some companies, but which collectively won’t turn Britain back into an economic powerhouse.”
“At DECTA, we saw in our survey of British consumers that confidence is down across the board, especially when it comes to confidence in British small businesses. This is understandable: ordinary people feel overstretched, they know that they can’t spend as much at any company, big or small, and therefore they know that those companies must be doing worse than they had previously. Consumers won't spend where they are not confident, which will only make things worse for small businesses that lack the resource to compete with larger, established brands. The budget, with its functional increase in income tax rates and other austerity-lite measures, does not seem like it will turn anything around, so confidence will remain low and businesses will take few risks – except perhaps to head outside of the country for growth.”
“We can see this short-sightedness in the way that the budget treated the gaming industry. While it creates a much higher social cost than many sectors, gaming and gambling is a £16.1 billion industry employing 75,000 to 90,800 people, and the UK Gambling Commission has spent years developing a regulatory framework that makes online gambling safer for consumers. The budget raises taxes on that industry from 21% to 40%, and that’s going to harm, not help: less revenue means less to invest in safety measures and anti-fraud technology, and may push gambling operators away from the UK and into jurisdictions providing less regulation and support for consumers. That is to nobody’s benefit.”
“I and many others have said this at every budget, but it bears repeating: Britain needs systemic change in order to become the economic power that it should be.”
Shaun Atton, Business Development Director of Auto Windscreens comments:
“The plan in the Autumn Budget to introduce a ‘pay-per-mile’ tax on fully electric cars and plug-in hybrids has certainly caught our attention. It’s been confirmed that electric vans will be out of scope when it’s introduced, however, it may have an impact on our other company vehicles.
“At Auto Windscreens, we’ve already made a bold commitment to sustainability with a 100% electric business car fleet and have now ordered 33 new plug-in hybrid vans to add to our nine electric vans in 2026. We’ll continue to closely monitor developments and policy changes and assess their impact on our own and our partners’ operations.”