Budget 2025 (Part 1): What It Could Mean for Insurance, Fuel Duty, and Fleet Costs

The UK Autumn Budget will be announced on Wednesday, 26 November 2025. While full details are still under wraps, there are clear signals about potential changes that could significantly impact fuel costs, insurance premiums, and day-to-day expenses for vehicle-dependent businesses. Here’s what couriers, hauliers, fleet operators, and SME owners should prepare for.

Fuel Duty: Will the 5p Cut Be Scrapped?

The government’s temporary 5p fuel duty cut, introduced in 2022, may end in April 2026. Combined with a return to the standard inflation-linked rise, that could push up pump prices by 5-6p per litre (fleetnews).

"As a result of a 5p increase, overall consumer prices would jump 0.3% – draining £2bn from UK households annually. For the average car-owning family, that’s £100 extra annually. By 2029, this climbs to £360." (Fleetworld)

The Office for Budget Responsibility estimates these changes would raise £2.7 billion in revenue (Fleetworld). While the Treasury may hold off for political reasons, many expect it to quietly let the cut expire.

Why it matters: For high-mileage businesses, any rise in duty directly increases operating costs, as fuel is one of the largest and least flexible expenses in transport operations. Fuel duty typically accounts for 65%–75% of the pump price at various price levels, so even small increases disproportionately affect margins. Rising fuel costs also contribute to wider inflation, pushing up the cost of repairs, parts, labour, and medical expenses, which in turn raises the cost of insurance claims and puts upward pressure on premiums across the market.

Road Maintenance: Further Funding Needed but Still Uncertain

Despite a £500 million pothole fund in the last Budget, many in the industry say conditions haven’t improved. Only 49% of hauliers are satisfied with the current state of UK roads (Fleetworld, Grant Thornton).

Why it matters: For business owners, poor road surfaces do more than raise repair costs - they increase both physical danger and financial risk. Potholes, uneven surfaces, and sudden road damage can trigger tyre blowouts, sharp manoeuvres, or loss of control, putting drivers, other road users, and pedestrians at real risk of harm. These incidents can also cause significant vehicle damage, lost delivery time, unexpected downtime, reduced productivity, and even legal exposure if another party is involved. Over time, a higher frequency of road-related incidents also contributes to rising insurance premiums, as insurers factor increased claim numbers and repair costs into pricing across the market.

What to watch: Whether the Budget includes more visible and targeted road repair investments.

Insurance Premium Tax (IPT): Could It Rise?

There are two main IPT rates: a standard rate of 12% (unchanged since 2017) applied to most general insurance policies such as home, car, and pet insurance, and a higher rate of 20% (unchanged since 2011) applied to travel insurance, insurance for mechanical or electrical appliances, and certain vehicle insurance policies. It is a quiet revenue source and raising the standard rate by just 1% could bring in £775 million. There’s speculation it could eventually rise toward 15% or even align with VAT at 20% (MHA).

UK businesses already pay some of the highest insurance taxes in Europe (ABI)

A rise would increase premiums across motor, property, liability, and health policies.

Why it matters: Higher IPT means more expensive cover. A 1% increase in IPT adds roughly 1% to whatever you currently pay. For many SMEs with smaller policies, this might only mean a small increase. But businesses with multiple policies or higher‑value cover will notice the cumulative impact across motor, liability, property, and specialist insurance.

Fleet Costs and EV Transition

The Budget could influence how businesses plan their vehicles for the next few years, particularly as the costs of running electric vehicles continue to shift.

A proposed 3p‑per‑mile EV road tax could add around £250 a year for an average EV driver, according to The Guardian. For high‑mileage business fleets, the impact is even greater,  an electric company car covering 20,000 miles a year would face roughly £600 in extra annual costs under the same charge (Fleet News Fleetnews). This charge would sit alongside existing taxes, as EVs have already lost their Vehicle Excise Duty (VED) exemption and now pay the standard £195 a year VED, plus any relevant surcharges.

At the same time, EV repairs typically remain more expensive than petrol or diesel repairs. Specialist labour, battery safety procedures, and longer repair times all contribute to higher insurance premiums for electric vans compared with traditional vehicles (electriccarscheme.com).

Used EV values have been volatile in recent years, although new investor confidence and increased funding across the EV sector (Fast Charge) may help support long‑term stability. Even so, many SMEs remain cautious about switching until prices settle. Industry groups are calling for Budget measures such as grants for used EVs, better workplace‑charging support, and clearer battery‑health reporting, which would make the used EV market more predictable and improve confidence for smaller businesses (Fleetworld).

Why it matters: With EV running costs changing and future taxes still uncertain, many SMEs may choose to wait for clearer long‑term policy before committing to electric vans.  EV running costs are becoming harder to predict. Until the government provides clearer long‑term plans, many SMEs may wait before switching to electric vans.

Ratcliffes' View

This article is Part 1 of our three‑part Budget series. Part 2 will give a brief overview of the wider business measures expected in the Autumn Budget, including SMEs and self-employed workers, possible tax changes, and funding for skills and digital investment.

Once the Chancellor announces the full Autumn Budget on 26 November, we will publish Part 3, breaking down the confirmed measures and what they mean for transport firms, SMEs, and all our clients across the UK.

In the meantime, if you’d like help preparing for possible cost changes, reviewing your cover, or assessing business risks for 2025–26, our team is here to support you. Get in touch with us today to discuss your options and plan ahead with confidence.