What changes can drivers expect from the Spring Statement 2025?
March 20, 2025 by Siobhan Doyle
Car changing is a big deal
The Chancellor could announce several major changes for drivers in her Spring Statement, also known as a mini-budget, on 26 March. Here’s what to expect.
Chancellor of the Exchequer Rachel Reeves is set to unveil the government’s economic plans on 26 March as part of the Spring Statement, which she promises to “give families and businesses stability and certainty regarding upcoming tax and spending changes.”
Here’s a roundup of the potential changes the Chancellor could introduce for drivers.
Changes in car tax
This April, several car tax changes announced in last October’s Autumn Budget will take effect. One of Reeves’s biggest changes in the previous Budget was to “widen the differentials between zero-emission, hybrid, and internal combustion engine (ICE) cars” through Vehicle Excise Duty changes.
From April, electric car owners will pay £10 for the first time in the first year, while hybrid and low-emissions cars (1-50g/km of CO2) will face a £110 rate. Rates for high-emission vehicles (over 76g/km CO2) will double, with the most polluting cars costing up to £5,490 in the first year.
While no changes to the Expensive Car Supplement (ECS), which imposes an additional VED charge on vehicles with a list price exceeding £40,000, are expected, it remains under scrutiny for its impact on EV buyers.
Extending the fuel duty freeze
The Chancellor confirmed the fuel duty freeze will continue for another 12 months, lasting until March 2026, unless further changes are made. The planned fuel duty increase for 2025/26 has also been cancelled, saving the average driver £59 in the upcoming financial year.
Increasing funding for electric vehicles
The government may relax EV sales rules after pressure from car manufacturers over the pace of the transition from petrol and diesel. Business secretary Jonathan Reynolds stated a review of the zero-emission vehicle (ZEV) mandate would take place, as carmakers warned the rules could harm the industry’s future. The mandate requires 28% of new car sales to be electric, sparking debate among automakers and experts.
The government has recently increased funding for EVs, including £200m for charging infrastructure and £120m for plug-in van grants and wheelchair-accessible EVs. Further funding or changes may be announced to support manufacturers in meeting ZEV targets.
Protecting British car production
The Chancellor may introduce measures to protect the British car industry after a challenging year marked by carmakers pledging to close factories or delay investment, damaging the UK’s manufacturing sector.
In November 2024, Stellantis, owner of Vauxhall, announced a £50m investment to strengthen its Ellesmere Port plant, leading to the closure of its Luton factory and the loss of 1,100 jobs. Meanwhile this February, BMW confirmed it would delay a £600m upgrade to its Oxford Mini plant due to ongoing industry uncertainties.
Introducing the Fuel Finder
As confirmed in the Autumn Statement, the government will look to launch the long-anticipated Fuel Finder tool to help petrol and diesel drivers save money. Expected by year-end, the tool could save 1p to 6p per litre, similar to Northern Ireland’s Consumer Council’s Fuel Price Checker, which saves drivers around 6p on petrol and 7p on diesel.
The industry’s response to potential changes
With speculation surrounding what might be included in Reeves’s Spring Statement, set to take place next Wednesday, a spokesperson for the online marketplace Carwow has called on the government to relax tax disincentives related to EVs.
They said: “To truly drive the adoption of electric vehicles, the government must remove tax disincentives on EVs over £40,000 and raise the threshold to £60,000.
“With so much volatility in the market, we also need clearer direction on the future of Zero Emission Vehicles (ZEVs). While the government’s ironclad commitment to ending the sale of combustion engine cars by 2030 and ensuring all new cars and vans are 100% zero-emission by 2035 is important, there’s an opportunity for a more flexible approach in the short term.
“A 2-3 year hiatus on punitive tax policies would provide the breathing room needed for the market to stabilise and innovate, ultimately supporting a smoother transition to a cleaner future.”
Last year, Carwow published a motoring manifesto outlining the driving rules the government should incorporate into its agenda. This includes introducing grants for installing EV charging points at home, offering new ‘green’ incentives for privately purchasing EVs, and ensuring motorists can find suitable and affordable insurance for their EVs.
Car change? Carwow!
Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.
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