7 car tax changes that Rachel Reeves could introduce in Autumn Budget

Motorists could be hit by one of seven car tax changes by Rachel Reeves, with the Autumn Budget just weeks away. Vehicle Excise Duty (VED) rises, updates to benefit-in-kind rates and possible fuel duty increases have all been tipped ahead of the Chancellor’s statement.

Drivers were hit with hefty rises last Autumn, with the Government confirming major increases to first-year VED rates. VED was also introduced on electric vehicles for the first time with a £195 annual charge issued on all EVs registered after 2017.

Reeves seemed to talk up the prospect of tax rises in her budget telling Sky News: “Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor.” Express.co.uk looks at the areas that could affect road users on Budget Day this November 26.

This is almost a certainty with the Government always confirming that VED rates will rise with Retail Price Index (RPI) inflation from April 1 of the following year.

It means the standard rate of £195 per year will increase for all petrol, diesel and electric car owners. Models registered before 2017 will also be affected on a sliding scale of fees depending on their vehicle emission rates.

There is understood to be some concern that the rolling 40-year exemption on VED fees for classic cars could come under review. The rule means owners of older cars registered before 1985 are not liable to pay VED fees, with models from 1986 set to enjoy the benefit next Spring.

However, Hagerty Insurance said taking away the exemption would be a “another blow” to the industry, calling on chiefs to look “more favourably on classic car owners”

The Benefit in Kind (BiK) rate for company EVs will increase from 2% to 5% between now and the 2027/28 tax year. Carwow has predicted that Rachel Reeves could be set to “tweak this schedule to give businesses more certainty”.

They argue that this may include the flexibility to “raise a little extra tax from pricier models”.

Campaigners at the Resolution Foundation have called for the introduction of a new pay-per-mile charge for electric car owners tied to vehicle weight.

The rule would see lighter EVs weighing in at around 1,000kg charged just 3p per mile to use the road. Meanwhile, a much heavier 2,800kg electric model would be charged around 9p per mile.

This is a Budget staple and is always a ‘will they, won’t they’ ahead of the big day itself. Last year, Rachel Reeves decided to maintain the current rate, including the Conservatives 5p cut back in 2022.

However, motorists may not get so lucky in 2025 with a rise touted in a bid to offset a loss of revenues as more switch to electric cars. FairFuelUK has passionately argued against a fuel duty hike and even wants rates for motorists cut further.

According to Carwow, there is “some chatter that EV schemes might come under review” after recent crackdowns on car ownership tax breaks.

They suggest motorists could face new rules around how the scheme world, or “limits” on how much tax can be saved under the scheme.

Labour is committed to boosting electric car sales ahead of their 2030 petrol and diesel car ban legislation. However, motorists are currently paying much more to charge their electric vehicles at public charging bays instead of at home.

Electricity at home is charged at 5%, compared to 20% for those using plugs on the side of the street.

When previously asked about potential road tax changes, the Treasury simply told Express.co.uk: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”