2025 Spring Statement: what does it mean for motorists?

The Chancellor, Rachel Reeves, has revealed the Government’s latest update on the economy, public finances and spending plans in the Spring Statement, which is an update of the 2024 Autumn Budget statement. 

The update has taken place after the emergence of some major challenges for the UK, including the need to boost the country’s spending on defence and finding a way to boost the sluggish economy. 

There were some big announcements in the statement, including confirmations of cuts to the welfare bill and government departmental spending. However, nothing was announced that should have a direct impact on the UK’s 42 million drivers.  

There were a number of changes brought in as part of the 2024 Autumn Budget, though, and there have been updates to some of them:

Lower Thames Crossing 

The day before the Spring Statement, the Government announced that permission had finally been granted for a new river crossing from Kent to Essex to go ahead. The 14.5-mile long stretch of new road will connect the A2/M2 junction with the M25 motorway.

The Lower Thames Crossing will consist of a pair of tunnels, built under the River Thames and measuring 2.6 miles long, making them the longest of their kind in the UK.

When it’s finished, potentially in 2032, it will take 13 million cars off the Dartford Crossing annually, improving journey times by 30% at Dartford and by 46% between Tilbury in Essex and Medway in Kent.

Planning of the Lower Thames Crossing began in 2009, and it has cost around £1.2 billion in public spending so far. Construction of the road is expected to start next year.

Potholes 

New strings have been attached to the £500 million that was announced in the Autumn Budget to fix the UK’s pothole-ridden roads. On 24 March, the Government announced that local councils will have to report on their progress in repairing broken Tarmac, or risk losing their portion of the £1.6 billion that has been allocated for this work. 

To keep the funding all councils in England will need to publish annual progress reports and prove public confidence in their work. 

While the additional cash is a welcome increase to the existing budget of £8.3bn pledged by the previous administration, it won't transform our roads. According to research by the Asphalt Industry Alliance, it would cost £17 billion to repair all of our roads, and that process would take 10 years. 

Changes to road tax

The proposed changes to road tax (VED) that are due to take effect from April 2025 remain in place. This means EVs lose their exemption from VED from April, and buyers will have to pay the next lowest first-year rate, which is currently £10. However, instead of paying the standard car rate of £190 each year after that, they will pay £10 a year until 2029-2030, which is good news for EV owners.

However, VED costs for hybrid and internal combustion-engined (ICE) cars will rise steeply in many cases.

Company car tax

At the Autumn Budget, it was confirmed that the low rate of company car tax, also known as benefit in kind (BIK) tax, will remain low from 2028 onwards to encourage the uptake of electric vehicles. The BIK rates for zero-emission vehicles will rise by 2% in 2028-2029 and 2029-2030, taking it up from 5% to 9%. However, company car tax rates for hybrid and ICE cars will rise from 2028-29 to incentivise the take-up of electric vehicles. 

Other vehicles have been hit hard by changes in this tax, in particular double cab pick-ups, which are now classed as cars for tax purposes. This change could leave pick-up owners facing a 236% increase in BIK tax, with a Ford Ranger costing up to £9360 more annually. 

The new rules apply from 1 April 2025 for corporation tax and from 6 April 2025 for income tax, with double-cab pick-ups treated as cars for the purposes of capital allowances, benefit-in-kind (BIK) and some deductions from business profits. 

Fuel duty 

This tax on petrol and diesel has been frozen since 2012. In 2022 then-Chancellor Rishi Sunak cut it by 5p to mitigate against sky-high fuel prices resulting from Russia’s invasion of Ukraine in February 2022. The Chancellor decided last year not to increase fuel duty or remove the 2022 discount.

Car insurance taskforce

Before the Autumn Budget, the Government announced the formation of a car insurance taskforce, which brought together experts from regulators, motoring groups, insurers and consumer groups to try to find solutions for the high cost of insurance. Its members include representatives from the ABI, Citizens Advice, Compare the Market and insurance regulators. We’ve not heard any announcements from the group yet, though.

Read more: How much is car tax: VED rates explained

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