3 days ago

How the Budget actually affects motorists, bodyshops & insurers

What’s changing for motorists

The UK Autumn Budget 2025 (announced by Rachel Reeves) introduced several measures relevant to drivers:

A pay-per-mile tax scheme for electric vehicles: from 2028-29, battery-electric cars are set to pay 3p per mile, and plug-in hybrids 1.5p per mile, with the rate rising in line with CPI inflation.
The freeze on fuel duty is extended for another year.
Some stealth tax changes: for example, income tax thresholds are frozen, pension salary–sacrifice changes, etc. While not motor-specific, these reduce disposable income for many households.

For EV owners: the new pay-per-mile tax will add to running costs from 2028 onwards. While at 3p/mile it might seem modest, for someone doing 8,500 miles it translates to £255 per year in the 2028-29 year.
For petrol/diesel drivers: the maintenance of the fuel duty freeze is some relief, but no new relief means costs may rise with inflation or if fuel duty is later increased.
For all motorists: reduced disposable income (via other tax changes) means less buffer for running costs, repairs and insurance.

Increased running costs may lead some motorists to delay non-essential repairs or servicing, pushing more work into lower priority/non-urgent categories.
Conversely, as EV owners bear a new cost, there may be slower uptake of EVs (some forecasts suggest fewer EVs on the road as a result of this tax), which may slow growth in EV-specific repair/maintenance services.
The shift in tax burden potentially makes older internal combustion vehicles relatively more attractive (for now), which may keep demand for traditional repair/maintenance stronger than anticipated.
Repair workshops may need to reassess service offerings: more focus on cost-efficient maintenance solutions, flexible payment options, perhaps more advice/support for cost-sensitive motorists.

Higher costs of ownership (via new taxes) could mean motorists cut back on extras: for example, choosing higher excesses, fewer optional cover add-ons, or shopping harder for lower premiums.
For insurers, increased cost pressures on motorists could lead to a rise in deferred or non-maintenance of vehicles; this can increase risk (e.g., breakdowns, accidents due to poorly maintained vehicles) and thus claims frequency/cost.
The longer-term shift to EVs may be slowed, affecting insurers’ assumptions around fleet composition, repair costs (EV repairs tend to be more expensive in some cases), and risk modelling. If fewer EVs are adopted or adoption slows, the anticipated repair cost savings (less engine servicing etc) may be delayed.
The pay-per-mile tax may also influence driving behaviour: possible reduction in discretionary mileage (which may reduce risk exposure), but also could shift more driving into concentrated time／routes (which could change risk profiles).

Motorists face higher running costs from 2028 via the new mileage tax for EVs, and potentially slower adoption of EVs.
Repair businesses need to prepare for cost-sensitive customers, possibly slower EV uptake, and a greater need to emphasise value and maintenance advice.
Insurers have to monitor shifting risk profiles: delayed maintenance, changes in vehicle fleet composition, changes in mileage/use patterns due to new tax burdens.
While the budget doesn’t hit petrol/diesel drivers immediately with a big new tax, the pressure is there — both in overall costs and in future policy direction.
Overall: a challenging landscape ahead for motorists, and thereby for the repair & insurance sectors — but also opportunity for those who adapt (e.g., offering budget-friendly servicing packages, telematics/mileage-based insurance, EV-repair specialism).