British drivers demand Rachel Reeves cuts VAT in Autumn Budget with car tax hikes causing 'strain'

As drivers eagerly await the announcement, 69 per cent of motorists surveyed are hoping for VAT cuts to be introduced next year.

A further two-thirds (64 per cent) would like to see additional tax cuts, while 45 per cent want the new Labour Government to reduce business rates at forecourts.

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The need for VAT cuts comes as the Ofgem increased the energy price cap by 10 per cent to an average of £1,717 a year.

The impact on EV drivers is set to be substantial, with the average cost to fully charge an electric vehicle at home rising from £13.41 to £14.70. The increase is estimated to impact roughly 1.2 million EV owners across the UK.

As the UK moves closer to its 2035 ban on new petrol and diesel car sales, a further seven per cent would like to see incentives for switching to electric cars announced.

John Cassidy, director of sales at Close Brothers Motor Finance, said: “The motor industry is vital to the economy and dealers play a major role. As the backbone of the car industry, giving motor dealers support should be at the front and centre of the Government’s plans.”

Another looming measure includes the introduction of new car tax changes next April which will create a "level playing field" for all drivers and could see some drivers pay an extra £600 a year.

This new tax model aims to address the significant decline in fuel duty revenues expected as more drivers switch to electric vehicles, which currently benefit from tax reductions.

He added: “Dealers are continuing to feel the pressures from all sides. Costs are rising for consumers and businesses alike, meaning demand is constrained and prices have no scope to fall.

“A VAT cut, or reduced business rates would provide much needed relief for dealers who are trying to navigate high costs from stock prices, taxes, through to energy bills. Any support measures will go some way to offering relief to dealers wanting their business to thrive in the months ahead, which ultimately will also help boost the UK economy.”

On top of a new tax system, drivers are also facing an end to the fuel duty freeze. The temporary 5p cut in fuel duty was introduced in 2022 under the Conservative Government but was always intended to be a short-term measure.

If the freeze ends, it could see drivers pay an extra £107 annually. Rhydian Jones, car insurance expert at Confused.com, explained that since 2022, drivers have been paying a lower fuel duty than in previous years.

He said: “Although it might not seem a lot, this has helped drivers save about £130 a year. But there are discussions that this cut might be reversed, and fuel duty could increase by even more than 5p per litre.

“While this might put a strain on the pockets of many, drivers must remember there are many ways to improve your fuel economy."

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Gordon Wallis, an expert from InterFuels, commented: "We need a balanced decision that takes into account the economic challenges faced by motorists while encouraging fuel efficiency and sustainability.

“And when it comes to topping up your tank, it can also be confusing to know which fuel stations are the cheapest around."