Summary of Key Autumn Budget Measures Affecting the Motor and Leasing Sectors
Following the Chancellor’s Autumn Budget announcement on 26 November 2025, we have reviewed the measures most relevant to rental, leasing, and fleet operators. The Budget included several positive outcomes, and some negative - summary below.
Good News for the Sector
- Leasing Sector Included in Capital Allowances (vans only)
For the first time, leased assets (including rental vans) will qualify for a 40% first-year allowance (FYA) for “main rate” assets purchased on or after 1 January 2026.
- This is a major breakthrough after years of exclusion from Full Expensing.
- Cars remain excluded, and further details will follow. This will apply to leased vans from 1/1/26.
However, the main rate writing-down allowance will fall from 18% to 14%, which is an unwelcome change.
- Salary Sacrifice – Electric Vehicle Schemes Exemption Protected
From April 2029, National Insurance savings on pension salary sacrifice will be capped at £2,000 per year.
- Electric vehicle salary sacrifice is not affected, which is a significant win for the industry and supports ongoing electric vehicle adoption.
- Expensive Car Supplement Threshold Raised for Electric Vehicles
Zero-emission vehicles (ZEVs) will only pay the expensive car supplement if priced above £50,000, up from £40,000.
- Applies to zero emission vehicles registered from 1 April 2025.
- Most vehicles registered from that date will avoid the charge entirely.
- ICE and PHEV cars keep the existing £40,000 threshold.
- Plug-in Hybrid BiK Easement Confirmed
A temporary BIK tax easement for impacted PHEVs will apply for cars registered from 1 January 2025 to 5 April 2028, certain PHEVs will use a notional CO₂ figure, simplifying administration and avoiding the need for dual CO₂ systems. This is a major improvement on the Government’s earlier proposals.
During the easement period, the CO2 emission figure for those PHEVs will be deemed to be a nominal figure of 1g/km for the purposes of the BIK charge rather than the CO2 figure on the registration document.
The conditions that a vehicle must satisfy to be eligible for the easement are: the vehicle was first registered on or after January, 2025; the vehicle’s quoted CO2 emissions figure is 51g/km or more; the vehicle was registered under any emission standard other than Euro 6d-ISC-FCM or Euro 6e; and the car’s electric range figure is one mile or more.
The current emission standard for cars and vans in Great Britain is Euro 6d, while in Northern Ireland – like the rest of the EU – the Euro 6e-bis emission standard has applied since January 2025.
Major New Challenge: EV and PHEV Pay-Per-Mile Charging
The Government announced that from April 2028:
- EVs will be charged 3p per mile.
- PHEVs will be charged 1.5p per mile.
A formal consultation has opened on how this will be implemented. The industry is concerned about:
- Added costs for early EV adopters
- The impact on future EV uptake
- Lack of support for rental and leasing companies already heavily invested in electrification.
Other Measures of Interest
Electric Car Grant Extension
- An additional £1.3 billion is allocated until 2029–30.
- Two funding tiers continue: £1,500 and £3,750.
Charging Infrastructure
- Consultation launched on further expanding permitted development rights for chargepoint installation.
- Additional £100m for public chargepoint rollout.
- Another £100m for local authority staff and expertise.
- 10-year 100% business rates relief for chargepoints and EV-only forecourts.
- A review of charging costs planned for Q1 2026.
Fuel Duty
- The 5p fuel duty cut extended until August 2026.
- Rates will return to March 2022 levels by March 2027 in steps.
- Inflation-linked rise for 2026–27 cancelled.
Employee Car Ownership Schemes (ECOS)
- BiK rule changes delayed until April 2030.
- Transitional arrangements will be provided.
Vehicle Excise Duty (VED)
- VED for cars, vans, and motorcycles will rise with RPI from 1 April 2026.
- No move to a weight-based VED system.
Benefit-in-Kind (BiK)
- No changes announced.
- No visibility provided for BiK rates beyond 2029/30.
Personal Allowances (company car drivers)
- Tax thresholds frozen until April 2028.
- Basically means that the rise in company car benefit in kind, will not be absorbed by any increase in the personal allowance of £12,570.