UK Chancellor Rachel Reeves Plans Budget Changes Targeting Driving Taxes Amid Economic Challenges

Chancellor Rachel Reeves is expected to announce significant changes in the upcoming Autumn Budget, with a focus on motoring taxes including potential pay-per-mile car tax and adjustments to fuel duty and electric vehicle (EV) taxation. There is speculation about introducing road pricing or weight-based levies to address a looming £35 billion funding gap as more drivers switch to electric vehicles, alongside possible hikes in taxes for EVs to balance fiscal pressures. The government faces a fiscal black hole potentially reaching £50 billion, with Reeves reportedly considering breaking Labour’s manifesto pledge by raising the income tax rate to meet stringent fiscal rules and avoid damaging market confidence. Experts warn that such tax increases could lead to job losses, especially in the automotive sector, with concerns over changes to Employee Car Ownership Schemes threatening thousands of jobs and the viability of new and nearly-used car markets. Economists caution that missteps in the Budget could lead to soaring gilt yields and increased borrowing costs, potentially destabilizing the UK's debt markets. Amidst these challenges, there is a call for fiscal measures that support growth and the transition to zero emission vehicles without causing severe economic disruption.