Autumn Budget 2026: What It Means for Car Leasing, Electric Vehicles and UK Drivers
Published: 30 October 2026 by Kian Cheshire | Applied Leasing – UK Vehicle Leasing Specialists
The UK Autumn Budget 2026, announced on 28 October, introduced important changes affecting electric vehicle (EV) drivers, company car taxation, business mileage allowances and fleet operating costs.
For businesses considering Business Contract Hire (BCH) and individuals exploring Personal Contract Hire (PCH), understanding these announcements can help with financial planning and choosing the right vehicle.
From the introduction of electric vehicle mileage-based taxation in April 2028 to changes in Benefit-in-Kind (BiK) rates and fuel duty, the Budget will influence the total cost of running vehicles over the coming years.
At Applied Leasing, a family-run UK vehicle leasing specialist established in 1990, we explain the key announcements and what they could mean for your next lease.
Autumn Budget 2026: Key Motoring Announcements at a Glance
| Budget announcement | Key change | When it applies |
|---|---|---|
| Electric company car tax | Zero-emission BiK reaches 10% | April 2030 |
| EV mileage tax (eVED) | 3p per mile for fully electric and hydrogen cars | April 2028 |
| Plug-in hybrid mileage tax | 1.5p per mile | April 2028 |
| Business mileage allowances | 55p per mile for first 10,000 qualifying miles | April 2026 |
| Higher business mileage allowance | 35p per mile above 10,000 qualifying miles | April 2027 |
| Public EV charging VAT | Standard 20% VAT treatment confirmed | November 2026 |
| Public charging support | £100 million to help reduce local charging costs | From spring 2027 |
| Fuel duty | Temporary 5p-per-litre cut extended | Until July 2027 |
Official source: HM Treasury – Autumn Budget 2026
1. Company Car Tax: Electric Vehicle BiK Rates Confirmed to 2030/31
One of the most important announcements for company car drivers and businesses concerns Benefit-in-Kind (BiK) taxation.
BiK tax generally applies when an employee receives a company car that is available for private use. The taxable benefit is calculated using factors including the vehicle's taxable list price and the applicable BiK percentage.
The Autumn Budget confirmed a further one-percentage-point increase across company car emission bands for 2030/31, subject to a maximum rate of 40%.
Electric Vehicle BiK Tax Rates
| Tax year | Zero-emission vehicle BiK |
|---|---|
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
| 2030/31 | 10% |
For cars emitting between 1g and 50g CO₂/km, the relevant BiK percentage reaches 20% in 2030/31. Higher-emission vehicle rates also increase, subject to the 40% maximum.
What does this mean for company car drivers?
Electric vehicles retain a company car tax advantage compared with many petrol and diesel vehicles, although the taxable benefit will rise over time.
Illustrative example:
A fully electric company car with a taxable list price of £40,000 would produce the following annual BiK tax liability for a basic-rate taxpayer, assuming a 20% income tax rate:
| Tax year | Annual BiK tax |
|---|---|
| 2026/27 | £320 |
| 2027/28 | £400 |
| 2028/29 | £560 |
| 2029/30 | £720 |
| 2030/31 | £800 |
These figures are illustrative and exclude other tax considerations. Actual liability depends on the individual's tax position and vehicle details.
Applied Leasing insight: Businesses considering a 36- or 48-month lease should factor future BiK changes into their company car and salary sacrifice planning.
Official source: HMRC – Company Car Tax Rates for 2030/31
2. Electric Vehicle Mileage Tax: New eVED Charges from April 2028
One of the most significant changes for electric vehicle drivers is the introduction of Electric Vehicle Excise Duty (eVED).
From 1 April 2028, a mileage-based charge will apply to qualifying electric and plug-in hybrid cars.
The announced initial rates are:
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Battery electric cars: 3p per mile.
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Hydrogen fuel-cell cars: 3p per mile.
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Plug-in hybrid cars: 1.5p per mile.
This mileage-based charge will operate alongside the existing Vehicle Excise Duty system.
How Much Could EV Mileage Tax Cost?
| Annual mileage | Fully electric car | Plug-in hybrid car |
|---|---|---|
| 5,000 miles | £150 | £75 |
| 8,000 miles | £240 | £120 |
| 10,000 miles | £300 | £150 |
| 12,000 miles | £360 | £180 |
| 15,000 miles | £450 | £225 |
These are illustrative annual calculations based on the announced initial rates. Actual charges will depend on the legislation, mileage and applicable rates.
How Will EV Mileage Be Recorded?
The government plans to use vehicle mileage information and odometer reporting to administer the new charge. The proposed arrangements also include digital reporting options, with further operational requirements to be implemented.
Drivers should follow official DVLA and HMRC guidance as the scheme approaches implementation.
What Does This Mean for Leasing?
For customers taking out a 36- or 48-month electric car lease, the new mileage charge could become relevant during the contract.
For example, a driver covering 10,000 miles annually in a fully electric car would face an illustrative £300 annual eVED charge at the announced initial rate.
When comparing electric and petrol vehicles, customers should consider:
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Monthly leasing rental.
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Charging or fuel costs.
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Vehicle Excise Duty and eVED.
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Insurance and servicing.
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Company car taxation, where applicable.
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Contract mileage allowances and potential excess-mileage charges.
Applied Leasing insight: A low monthly rental is only one part of the total cost. Understanding future taxes and running costs can help customers choose a more suitable vehicle and agreement.
Official source: HMRC – Electric Vehicle Excise Duty
3. Business Mileage Allowances Increase
The Autumn Budget also confirmed increases to the tax-free and tax-deductible mileage rates for qualifying business travel in employees' own cars and vans.
The changes are:
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55p per mile for the first 10,000 qualifying business miles, effective from 6 April 2026.
-
35p per mile for qualifying business mileage above 10,000 miles, effective from 6 April 2027.
These rates are particularly relevant to employees using their own vehicles for business journeys, sometimes described as the grey fleet.
Example: 12,000 Qualifying Business Miles
Using the rates applicable from April 2027:
| Mileage | Calculation | Allowance |
|---|---|---|
| First 10,000 miles | 10,000 × 55p | £5,500 |
| Next 2,000 miles | 2,000 × 35p | £700 |
| Total | £6,200 |
This is an illustration of the approved mileage amount, not an automatic payment or tax refund. Eligibility and tax treatment depend on the vehicle and journey arrangements.
Important: AMAP rules for employees using their own vehicles should not be confused with the separate rules applying to company cars.
Official source: HM Treasury – Budget 2026 Mileage Allowance Announcements
4. Public EV Charging: VAT and £100 Million Support
The Autumn Budget also addressed the cost of charging electric vehicles.
Public EV Charging VAT
The government confirmed that electricity supplied through publicly accessible and workplace EV charging points is generally subject to standard-rate VAT, currently 20%, rather than domestic electricity relief.
The legislation takes effect from 1 November 2026.
Electricity supplied for qualifying domestic use can have different VAT treatment.
Official source: HMRC – VAT Treatment of Public and Workplace EV Charging
£100 Million to Reduce Public Charging Costs
The government announced £100 million over two years, starting in spring 2027, to help reduce charging costs at lower-powered public charge points near people's homes.
This is particularly relevant to motorists without private driveways or access to home charging.
The measure focuses on the affordability of local public charging, rather than simply expanding the number of chargers.
Official source: Department for Transport – Cutting Electric Vehicle Charging Costs
5. Fuel Duty Freeze Extended Until July 2027
Petrol and diesel drivers also received an update on fuel duty.
The government extended the temporary 5p-per-litre fuel duty reduction and deferred the planned inflation-linked increase until 1 July 2027.
For businesses operating petrol or diesel vehicles, fuel duty remains an important factor in forecasting fleet running costs.
However, future changes should be considered when planning longer-term vehicle contracts.
Official source: HM Treasury – Autumn Budget 2026 Fuel Duty Measures
6. What Does the Autumn Budget Mean for Business Contract Hire?
For businesses, Business Contract Hire (BCH) can provide a structured approach to vehicle funding through agreed rental payments over a specified contract term.
However, the Autumn Budget highlights why companies should consider more than the advertised monthly rental.
Fleet decision-makers should review:
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Vehicle choice and CO₂ emissions.
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Future company car BiK liabilities.
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Contract term and annual mileage.
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Fuel and charging costs.
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EV mileage taxation from April 2028.
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Maintenance requirements and other operating costs.
Planning Your Next Business Vehicle
Businesses choosing electric vehicles should consider how their contract will overlap with the introduction of eVED and future company car tax changes.
Applied Leasing can help customers compare available leasing options, contract lengths and mileage profiles to support informed vehicle choices.
7. What Does the Autumn Budget Mean for Personal Contract Hire?
For private motorists, Personal Contract Hire (PCH) remains an option for driving a new vehicle without purchasing it outright.
A typical PCH agreement involves an initial rental followed by agreed monthly rentals for a specified term and mileage allowance.
At the end of the contract, the vehicle is normally returned, subject to the agreement's terms and any applicable charges.
PCH generally avoids direct exposure to the vehicle's resale value, although customers remain responsible for contractual obligations such as mileage limits and vehicle condition.
Will Electric Car Leasing Become More Expensive?
Not necessarily in terms of monthly rental, but the overall cost of driving an electric vehicle may change as eVED is introduced.
The impact will depend on the vehicle, mileage, energy costs, tax arrangements and individual circumstances.
For customers considering an electric car lease today, it is worth calculating the potential annual eVED cost alongside the monthly rental.
8. Frequently Asked Questions About the Autumn Budget 2026
Will electric car drivers pay road tax and mileage tax?
Under the announced eVED arrangements, qualifying electric cars will be subject to the new mileage-based charge alongside the existing VED system from April 2028.
How much will electric vehicle mileage tax cost?
At the announced initial rate of 3p per mile, an electric car travelling 10,000 miles annually would incur an illustrative £300 annual charge.
What will electric company car tax be in 2030?
The announced BiK percentage for zero-emission company cars is 10% for the 2030/31 tax year.
Does the new EV mileage tax apply to leased cars?
The proposed eVED regime applies to qualifying cars regardless of whether they are purchased outright or leased. Customers should check how any relevant charge will be administered under their leasing agreement.
Does the Budget affect petrol and diesel vehicles?
Yes. Fuel duty arrangements and future company car tax rates can affect the running costs of petrol and diesel vehicles.
Is electric car leasing still worth considering?
Electric leasing may remain suitable for many drivers, particularly where charging costs are competitive and the vehicle meets their driving needs. The most appropriate choice depends on total costs, mileage and personal or business requirements.
9. How Applied Leasing Can Help You
At Applied Leasing, we have been helping UK businesses and drivers find vehicle leasing solutions since 1990.
As a family-run vehicle leasing specialist, we understand that choosing a vehicle involves more than comparing monthly payments.
Whether you're reviewing your company fleet, exploring an electric vehicle or looking for your next personal lease, our team can help you compare suitable options.
Our Vehicle Leasing Services
Business Contract Hire: Explore leasing solutions for businesses, company vehicles and fleets.
Personal Contract Hire: Find personal leasing offers with a choice of vehicles, contract terms and mileage options.
Electric Vehicle Leasing: Compare electric cars and consider the potential impact of charging costs and future taxation.
Dedicated Leasing Support: Speak with an experienced leasing specialist who can guide you through available offers and contract options.
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Sources and Important Information
This article reflects the Autumn Budget announcements published on 28 October 2026. Some announced measures require legislation or further implementation guidance.
Official references:
Information is provided for general guidance and is not individual tax or financial advice. Tax rules and vehicle leasing arrangements may change. Readers should check the latest government guidance and obtain professional advice where appropriate.