Everything Rachel Reeves’ October Budget holds for drivers including brutal fuel duty hike… & how you can cut costs

DRIVERS are expected to be hit hard as the Government looks to raise much-needed cash.

Chancellor Rachel Reeves will deliver Labour’s first Autumn Budget on Wednesday, with motorists expected to bear hefty extra costs.

These include fuel duty increasing for the first time in 14 years – bumping up prices at the pumps.

The Government says turning around a £22 billion “black hole” in same-year spending is vital for running public services.

That’s on top of another £20 billion the Treasury needs to raise over the next few years.

But the Chancellor has chosen to try and extract more from Britain’s hard-pressed drivers in aid of that goal.

Here’s what it could mean for you and how you can keep costs down.

Fuel Duty

The biggest change Ms Reeves is expected to make is the first increase in fuel duty for 14 years.

This duty is the tax that companies pay to allow them to sell fuel in the UK.

However, the cost is passed on to customers by including it in the prices at the pumps.

Since 2011, the main rate has been frozen at 57.95p per litre of petrol and it was cut further to 52.95p per litre in 2022.

This cut was always presented as temporary but stuck around beyond the election and change of government.

Now, though, it is expected to be reversed next week when Ms Reeves rises to the dispatch box.

And she is reportedly considering tacking on the first rise in the duty in over a decade, with an extra 7p per litre possibly added on.

Experts from WhatCar have estimated that such a move would bump up prices on the forecourt from the current average of 135.03p to 145.61p per litre.

Quentin Willson, motoring campaigner and former face of Top Gear, told SunMotors: “‘I expect the chancellor to scrap the 5p Covid cut and also raise fuel duty by 2p to 3p.

“After 13 years of freezes, there’s an expectation that this is the right time for a duty hike, as we enter an era of cheaper oil.

“A 7p rise in duty – if oil prices stay stable – would bring petrol to 142p and diesel to 147p per litre costing drivers £4 more per fill up and an extra £175 per year.

“Taxi operators are already saying the hike could cost them up to £1,000 per year in extra fuel costs.”

So how can I keep costs down?

Mr Wilson has also shared his tips for keeping fuel usage down.

First of all, he recommended removing as much extra weight from the car as possible.

Anything in the boot, doors and even glovebox, as well as things like roof racks, that you aren’t using adds mass and makes your motor less efficient.

Likewise, make sure that you don’t spend extended periods with the engine idling.

Sitting with the engine on burns fuel even when you’re not moving so make sure to switch off as soon as you park up and not hit the ignition until you’re ready to leave.

Lots of modern cars have automatic stop/start features to save fuel but it could also be worth switching off manually if you’re likely to spend more than around 10 seconds sitting in traffic.

Once you get on the move, Quentin also had some tips for how you should be driving to make the most out of a tank.

Gentle acceleration and braking, easing off in turns and shifting up as early as possible all reduce stress on the engine and boost efficiency.

Turning off the heater once the cabin has warmed up could also reduce fuel consumption by up to 10%, he added.

And planning your route is essential so that you don’t get lost and waste fuel driving around aimlessly.

Elswhere, technology can be a big help, with most cars feature a trip meter, which measures your mileage per journey.

This can help you measure what sort of mpg you’re getting and let you know if you need to drive more economically.

Similarly, Quentin advised using free apps and websites to compare local petrol prices and get the best deal.

You could see gaps of up to 5p per litre between forecourts just a few miles apart.

As long as you don’t have to drive too much out of your way to get there, this can be a great way to save.

Mr Wilson added: “For the first time in 13 years, we’re likely to see a hike in fuel duty in the upcoming Budget.

“But most drivers don’t realise you can increase the miles you get to every litre by as much as 25% if you just get into a fuel-saving mindset.”

Road Tax

Another major money-raiser coming in is the extension of road tax to electric vehicles.

At the moment, cars are taxed based on their emissions rating but EVs have been exempt until now in an effort to incentivise drivers to make the switch from petrol and diesel.

But the Treasury can only sustain that for so long before road tax receipts start to dry up.

As a result, the last Government announced that the tax would be extended to EVs in April 2025, with owners paying the lowest band rate beyond the second year of registration.

They will also have to cough up for the expensive car supplement from the second to fifth year, adding an extra £410 per year to their bill if their motor is worth over £40,000.

Since EVs tend to be more expensive than their petrol counterparts, that actually covers a large chunk of the models currently on the market.

And the current government is not expected to make any changes to the policy in the Budget, meaning EV fans are set to be hit hard from next year.

Insurance premium tax

One tax which many Brits might be less familiar is insurance premium tax (IPT).

As the name suggests, this is a tax the Government collects on most forms of insurance premiums.

Like fuel duty, it is effectively a hidden levy as it is charged to providers and folded into the costs passed onto customers.

The standard rate currently sits at 12% but reports from the Insurance Times suggest that Ms Reeves could look to raise this next week.

And just like fuel duty, this would mean higher prices for insurance customers overnight as companies seek to maintain their margins.

Pay-per-mile

One thing that won’t be coming in the Budget is a new system of road tax.

Reports surfaced earlier this year that the Treasury was considering introducing pay-per-mile (a.k.a road pricing) to make up for the drop in VED and fuel duty receipts caused by the increasing uptake of EVs.

The policy would mean that drivers were charged a set amount for each mile they travel rather than based on the emissions rating of their vehicle as is currently the case.

Some supporters even suggested a rate as high as 15p per mile, which would have seen the average tax bill increase by £190 a year.

However, as first reported by The Sun, the Government has officially ruled out pay-per-mile being introduced in the near future.

A spokesperson for the Department for Transport told The Sun: “We have no plans to introduce road pricing.

“We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”