Full breakdown of the new Autumn Budget for Electric cars: What is the actual impact?!

Full breakdown of the new Autumn Budget for Electric cars: What is the actual impact?!

Rachel Reeves has just finished the autumn 2025 budget and so we’re still digesting what that means. But one of the big talking points especially relevant to us is the effect on electric vehicles. You’ll hear the terms that a 3 pence per mile charge is going to be levied on electric vehicles. So what is that? Why? And exactly how will that compare the running cost in the future of an electric vehicle to say a petrol or diesel? Also, I think I may have some good news about this Tesla Model Y, which would have incurred the premium car tax levy next year, but in fact now probably won’t. So, that’s what I’m going to talk about in this video. So, firstly, 3 P per mile is going to be put onto electric vehicles. I’ve got some numbers over here I’ve been running. Now, it has only just finished. We are about an hour after the budget and I’ve been on the phone as well. Um, but I’ve been running some numbers to get an idea of exactly what that means for running costs of electric vehicles because of course I think straight away we’ll see a lot of stuff in the media about electric vehicles now costing more to run than petrol and diesel and things like that. So I want to just get at least an initial idea or handle on what this might mean for you and should you buy an electric car in the future. Well, of course you should because it’s the right thing to do. don’t have tailpipe emissions. So it is better for the environment around us. You got to remember that petrol and diesel cars they do pollute and that is a poisonous gas that they let out. I mean people commit suicide by breathing it in. So we want to enhance the transition to electric vehicles and not penalize the transition to electric vehicles. One of the big motivators for changing to electric vehicle is the savings that you can make in terms of running cost. I’ve always quoted that at the moment, based on my cheap overnight electricity tariff at home, £10,000 mi of driving in a Model 3 Tesla, like any one of these, costs around about £160 in your electricity cost for 10,000 miles. Compare that to the cost of petrol and diesel, which is a lot more. In fact, that’s been one of the factors in here. But why is the government imposing the 3 p per mile charge? Well, a lot of people don’t really think about it much, but in the petrol and diesel that you buy, the government charge for fuel duty. They get tax taken from that pest cost that you pay for the petrol at the pump and they earn quite good money out of that. But if you have an electric car, you’re not doing that. So, they’ve been losing out a lot of money because less people are going and filling up at the petrol pump. So, therefore, the cost per mile essentially they’re losing out on. And the government doesn’t like to lose out on money and they’re rather short of money. There’s rather lots of borrowing going on and let’s not get too political about where the money goes to. Let’s focus on the EV side of things as much as we can. As a business owner, I’ve got a few other opinions, but I’ll probably gloss over that for now. That’ll probably be another video. Actually, I probably shouldn’t. Anyway, electric vehicles. Um so I’ve created a couple of tables here again initial figures but one is to compare the cost of running an electric vehicle to petrol diesel for you the consumer for putting the you know uh fueling your car versus charging your car at home also the tax you pay because road tax has been imposed on electric vehicles now as well. So whereas we used to have zero road tax, there is no road tax. Bearing in mind in all this, if we go to cars uh which owned by business and allow for private use, a company cars, there’s still massive savings to be had with electric vehicles there. So if I forget to touch on that later on, then don’t forget that there’s still massive savings. But just in terms of running cost, let’s just say you, Mr. Smith, are going to buy an electric car. So roughly speaking, for a petrol car averaging about 36 miles per gallon, and yes, I know there will be cars that do more than 36 miles per gallon, but that’s the average according to AI search engines and such like. At an average price of petrol these days, the cost of fueling that car for 10,000 mi is going to add up to about 1,79. So I call it just over 1,700 for a diesel car. It’s taken the average real world of 43 miles per gallon. Uh I know there are diesel cars that can do more than that. This is an average of £1,511 you’re going to be spending on fuel for you the consumer, the end user. However, if you have an EV and it’s using an average of 3.5 miles per kilowatt hour, which I can do better than that as well. You might be saying you can do more than 43. Well, I can do a lot better than 3.5, but again, it’s taking an average. That is going to cost you. It’s allowed £200 here for your uh home energy charging. If you’re going to charge just at your standard domestic rate without any overnight EV discount charges, it’s going to cost you about £752. So £200 the normal situation if you can charge at home at night on cheap energy versus 1,700 odd pound for petrol, 1,500 for diesel. Now, if we have to pay three pile, then that’s going to add for three for 10,000 miles, an extra £300. So, it means you actually be looking at more like £500 of running costs for £10,000 peranom. So, still big savings to be had. 10,000 mi, extra £300 per year to pay in in duty. Um, I don’t know how they’re really ever going to implement this. By the way, there’s another whole kind of topic to explore there, isn’t there? You know, when you buy and sell a car, do you put it in there? And if a car is used partly for business, partly for personal, is there’s going to be any separations there? Does the just the registered owner get the bill or how does it all work? They can’t just add a box to your car that tracks it. That’s, you know, privacy uh breach. So, it’s going to have to be on sort of buying and selling cars, which means that data would have to be put in accurately. Don’t know. It’s going to take a bit of work to implement that. Again, if you’ve got comments on this or ideas, put it in down below. Be interested to read that. I would also add at this point you’ve got to consider the massive savings that you can make in terms of the lack of servicing with an electric vehicle. And they’ve proven themselves really well now. Just last week myself and my colleague Tom completed a lap of the UK in our Tesla Model 3 less than four years old. That car has already covered over 235,000 miles and it’s never gone wrong, never had a fall and never been serviced as such. Never had an oil change, for example. original motors, batteries, bodywork, glass. All it’s ever had is tires, wiper blades, cabin filters, and suspension bushes. Whereas other cars would of course need exhaust and clutches and DPFs and all that kind of stuff. You know, you know what’s involved. Water pumps, cam belts, we can go on. So with these charges, what’s the difference for the government then? Because the whole reason for this was so that the government doesn’t lose out on money. We need to scratch in money from everywhere. Well, again, initial calculations would suggest that the revenue to the government from taxation on a petrol car for 10,000 mi based on the fuel duty and then also the vehicle excise duty, but count that as £195 for all of them because that’s usually the rate for the EVs now as well. They would get about £864 in duty revenue. Diesel about £755. EVs would have been nothing. Now with vehicle exit excise duty they will get about £195 but with these new three pence per mile charges if they can ever implement that from 2028 which is when this is proposed for they would then earn about £495 in revenue. So they are still they’re making money where they wouldn’t have had nothing. Okay. And but not quite as much as the revenue they get from petrol or diesel. They still tax petrol and diesel more basically is a simple answer with that. So, some interesting numbers and I think the important thing here is to remember that EVs still offer big savings in terms of the per mile running costs and also the lack of maintenance and also lack of tax liability as well, especially if you’re a company car uh owner or driver. Couple of questions with this. So, that car down there I’m looking at has charged off of the solar panels on the roof of this building today. Yeah. But we have to pay tax on that. Yeah. Whereas the petrol you buy, you have to buy it and they, you know, Yeah. you pay at the pump. You pay Yeah. Effectively, you pay it through the pump through the retailer. But if I’m charging that car and refueling it off my own solar panels, if I could make my own petrol or diesel, would the government still tax me for the petrol or diesel I put in the car? They’ll probably find a way. This is the question. If I had a refinery at home Yeah. today, would they would they charge me? They couldn’t. So how they going to do it for this or have we got to fill out a massive form knowing the government there’ be a big online form to fill out every year of how many miles you done and what proportion was what? I don’t know. So see somebody that somebody that charges at home most of the time. So let’s say 90% of the times he charges at home from they still get taxed. Yeah. They still get you know this this uh three people a mile. Yes. from energy that came from solar. Yes. From the own building. Yes. Yes. This is why it doesn’t make sense. Plus, how they going to administer it? Let’s say tomorrow we go and buy a car from somewhere and we drive it back here and it goes out some test drives. How how do we declare the mileage for that? When you buy and sell it, are you putting the mileage in? There’s going to be a whole tracking line of in invoicing. Let’s say we got a pool car like Mars. Tomorrow you’ll drive it. Then Tom will drive it and I’ll drive it. We’ll driven it. It’s a company owned vehicle. sub the company cops the bill but let’s say at the weekend you got a lovely family trip to Scotland back do I invoice you for that cuz it’s going to be now quite expensive or yeah how does it work these are just some of the questions we have initially and I bet you’ve got yours below so uh I bet you’ve got yours so comment down below that’s what I mean there’s a whole load of complications in this yeah I mean taxi companies will probably have to put that into the cost of fairs Yeah. Tax. True. Taxi companies. Yes. Yeah. They do a lot of miles. I mean, miles would have done 50,000 mi every year. That’s $1,500. Yeah. Yeah. On top of Oh, we still would pay more in tax if I bought petrol diesel. But the 50,000 mi a year is probably going to be 2/3 off of our own solar panels. So, can we deduct that? I don’t know. The other thing that they’ve talked about is a road tax. So, I’m just walking this way because this car here is a particularly uh relevant example here. Now, there are also uh a 1 and a half p per mile uh charge for a uh plug-in hybrid, by the way. But I didn’t get around to running the numbers and those yet. Basically, you’re going to be charged per mile, but what if you haven’t plugged it in? You know, what if you never plug it in? What if you always plug it in? You’re still going to be charged one half p plus and the fuel duty. So, you’re sort of paying it twice for a plug-in hybrid. Weird situation. Anyway, let’s talk about annual road tax because this is the other change. Now, if you’re not familiar, uh EVs were free of annual road tax until April 2025. Then, if you bought a new electric vehicle from April 2025 onwards, as in already happened 6 months ago, and that vehicle was over £40,000, then you would have to pay a premium car tax on top of an annual car tax. So, you’d pay £195 a year for all of them. It’s cheaper the first year, but that’s going to years 1 to5,1 195 per year. And then any car after April 2025 had this premium tax applied an extra £400. So a car like this Model Y here, £49,000 new. Now the first year was something like £20. But come se it September 2026, if I still got this car then and I tax it then, this was going to be £600 per year. However, they’ve raised this premium car tax ban now up to £50,000 for electric cars. So that means a car like this would then no longer attract the premium car tax. Will it apply retrospectively? I think so. I think so. So whereas next September I was expecting to pay about £600 a year tax for this car. This car was something like £49,900 new. Actually, now it will be £1.95 like other cars um that are typically were under £40,000. And the only Tesla that didn’t have this premium car tax, by the way, was the very basic Model 3 with no options. Don’t even take a free paint color change because it makes the list price higher and above 40,000, which means a higher and premium car tax liability. Except it probably now won’t. It will if your car is over £50,000. Again, Number one sort of thing to remember with this, any car, any EV registered before the end of March 2025 would actually still be 195 no matter what it costs. You £195 per year. If it’s old in 2017, it’s actually zero I think or 20 per year, something like that, but very very cheap. So, if you’ve got a 2022 Model 3, 2021 Model 3, 2021, these all 195 per year, 2025 cars would have been £600 a year, if over £40,000. But, as long as it’s under £50,000, I think now be just 195. So, if I got this car next year, it’s a very good car. Don’t see why not. Uh, that’s good news for me. About the only piece of good news really to be honest. So, that’s my brief run through and summary so far. Uh, yes, the theory of a 3 p per mile charge for EVs, but still cheaper than petrol and diesel, not ideal. Who wants to pay more tax? But if you’re of the ilk to say, well, look, we got to pay our way. Okay, fair enough. Still cheaper than petrol and diesel. The government will get a couple hundred pounds less than they would if you had a petrol or diesel car, but typically in terms of running costs, you are still likely to save about a,000 pounds per year for you as Mr. Smith driving your EV compared to a petrol or diesel car roughly speaking in terms of numbers, but just be assured there are still savings. So, um, more details will follow. Uh, there’s lots to come out in the wash. This has only just finished. This is me just putting some initial numbers together. So, put your comments down below. What do you think? Do you beg garage paying the 3 pence as an EV owner? Do you think it’s fair and reasonable? If you’re not an EV owner, but you were thinking of going EV, has this put you off? Has it not put you off? What do you think? I want to hear all your comments down below. So, I’m sure there could be a bit of a storm. Be polite to each other. If you’re anti-EV or proEV, just talk facts and be polite to each other. there’s no reason to be insulting. Um, but just let us know your thoughts below because it would be interesting to have that feedback. And tomorrow morning I’m doing an interview on a BBC News program. So I’ll be interested to read some of your comments before tomorrow morning. Does that make sense? Okay, that’s it from now. Comments down below. Thanks for watching.

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How much will this new Pay Per Mile scheme being introduced by the government in April 2028, affect EV running costs, and does it really have that much impact?

In this video, I work out exactly that, how much more it will cost the average person, and will they still save money when compared to a petrol or diesel car? (Spoiler alert, yes they still do!).

I also cover the changes to the luxury car tax scheme, as lots of EVs now escape that extra cost they incurred due to being over £40,000.

Full breakdown of the new Autumn budget for EVs: what is the actual impact?!

How much does the new 3p-per-mile UK road tax affect electric vehicles? Are they still cheap to run?

(FYI no, you’re TV or screen is not broken, our camera had an issue mid-way through filming, hence why you see that small line – sorry!)

Richard Symons
R Symons LTD “RSEV”
Used EV Specialist based in New Milton, Hampshire on the South Coast near Southampton and Bournemouth

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