Autumn Budget: What It Means for Car Finance Buyers

The dust has settled on the Autumn Budget, delivered on 28 October, and drivers have plenty to digest. 🚗

There was no dramatic shake-up for motorists. But a few decisions matter if you're about to sign a finance agreement, especially on an electric car or plug-in hybrid.

Here's what changed, what didn't, and how it could affect your numbers.

Pay-per-mile for EVs is staying

The headline for EV buyers is that Electric Vehicle Excise Duty (eVED) is going ahead, despite pushback from the industry. It starts in April 2028, with rates unchanged:

• 3p per mile for fully electric cars
• 1.5p per mile for plug-in hybrids
• Rates rise with inflation from 2029-30

At 10,000 miles a year, that's £300 for an EV or £150 for a PHEV. Roughly £25 a month for an electric car.

The Government did add some practical improvements. There'll be a mileage estimation tool at launch, an opt-in "eVED Connect" system using a car's built-in connectivity, and automated refunds by 2030.

The trade isn't convinced. The BVRLA's Toby Poston said "making a bad tax easier to administer doesn't make it a good tax".

Why this matters for a deal you sign today 💡

It's easy to think April 2028 is miles away. On a finance agreement, it isn't.

A 48-month PCP signed this month runs to late 2030, so you'd pay eVED for more than half of the deal. A 36-month agreement would still see around 19 months of it.

It won't appear in your finance agreement, but it'll come out of the same monthly budget. So when you work out what you can afford, add it to your running costs alongside insurance and charging.

There's a second, less obvious effect. On PCP, your monthly payment depends on the car's predicted future value. If eVED changes how used buyers view EVs, that could feed through to residual values and future quotes, though nobody can say by how much yet.

The Electric Car Grant carries on ✅

Better news here. The Electric Car Grant continues, offering up to £3,750 off eligible new EVs, with funding running to 2029-30. The Government says more than 160,000 drivers have benefited so far.

A grant lowers the price you're financing, so it cuts your monthly payment from day one. It's worth asking which models qualify and at what level.

Petrol and diesel drivers get a reprieve

The 5p fuel duty cut has been extended to July 2027. That doesn't make fuel any cheaper today, but it does stop tax adding to the price at the pump for now.

Vehicle Excise Duty will rise with RPI from April 2027, so expect a small increase in your annual bill.

Charging costs: a mixed picture 🔌

There are a few changes to the cost of running an EV:

• 0% VAT on household electricity extended to July 2027, which should trim bills
• £100 million over two years from spring 2027 to cut prices at local, lower-powered public chargers, with potential savings of up to £150 a year
• VAT on public charging stays at 20%, so hopes of a cut have been dashed

If you can charge at home, the running-cost case for an EV remains strong. If you rely on public chargers, do the sums carefully.

Business drivers and company cars

If you use your own car for work, there's a welcome change. The tax-free mileage rate is now 55p a mile for the first 10,000 business miles and 35p after that.

EV salary sacrifice schemes were left alone, and company car tax for electric cars continues its planned climb, from 4% this year to 10% by 2030-31.

These measures still have to pass through Parliament, so details can shift.

So should you change your plans?

For most buyers, no. Nothing here makes an EV a bad choice, or a petrol car a bad one either. It's simply a reminder to look at the total cost of running a car, not just the monthly payment.

Rates matter too. The Bank of England's next decision is due on 5 November, so it's worth keeping an eye on where finance costs head next.

Talk it through 👋

Whether you're in Reading, elsewhere in Berkshire or further afield, We Finance Your Asset can help you compare options and work out what a deal really costs over its full term.

Get in touch whenever you're ready to run the numbers.