Chancellor Rachel Reeves delivered Labour's first budget since 2009 on 30 October 2024, setting out measures covering fuel duty, electric vehicles, clean energy investment and North Sea taxation1. Reeves said the plans would help deliver the government's mission to make Britain a "clean energy superpower"1.
Fuel duty was frozen again, extending a freeze that has run for 14 years and which, according to the Office for Budget Responsibility, has cost the exchequer a cumulative total of £100bn1. The temporary 5p per litre cut introduced in 2022 was extended "for one year, at a cost of £3bn next year", with the rate remaining at 53p1. The Office for Budget Responsibility says that if fuel duty remains frozen it would cost the Treasury a further £5bn a year by 20301. Carbon Brief analysis found the freezes have left overall UK carbon dioxide emissions as much as 7% higher than they would otherwise have been1.
On motoring taxes, cars emitting more than 76g of CO2 per km will see their first-year vehicle excise duty rates doubling from 1 April 2025, while the first-year rate stays frozen until 2029-30 for zero-carbon vehicles1. Benefit-in-kind tax rates for company cars will increase by 2% per year out to 2029-201. The budget confirms the sale of cars that "rely solely on internal combustion engines" will end by 2030, with all new cars and vans required to be "zero emission" from 2035, meaning no hybrids1. More than £200m is to be invested in 2025-26 to accelerate the rollout of electric vehicle charging points1.
The energy profits levy on oil and gas companies will rise by three percentage points to 38% from 1 November1. The government pledged up to £21.7bn to support getting the UK's first carbon capture and storage projects running over the next 25 years, and confirmed the introduction of a carbon border adjustment mechanism from 20271.
"The energy profits levy (EPL) will rise by three percentage points to 38% from 1 November"
Other transport measures include raising the single bus fare cap in England to £3, up from the current £2 limit, which was set to expire in December; the New Economics Foundation said extending the £2 cap would have cost £300m per year1. Air passenger duty rises, equating to an extra £2 on short-haul flights in economy class, and duty on larger private jets increases by 50%, which Reeves said would amount to £450 per passenger1.
| Measure | Change | Date |
|---|---|---|
| Fuel duty | Frozen, 5p cut extended | One year from budget |
| Energy profits levy | Up three points to 38% | 1 November 2024 |
| High-emission car first-year VED | Doubling | 1 April 2025 |
| Zero-carbon car first-year VED | Frozen | Until 2029-30 |
| Bus fare cap, England | Raised to £3 | After December 2024 |
Why it matters for households
The fuel duty freeze keeps the cost of filling a petrol or diesel car unchanged for another year, which affects running costs for households that depend on a vehicle1. The Social Market Foundation has found that the poorest households benefit far less from lower fuel duty than the richest, who tend to drive more and own more vehicles1. The bus fare cap rise to £3 raises the cost of the alternative for households without a car1.
For homes considering a switch to electric driving, the first-year vehicle excise duty rate for zero-carbon cars stays frozen until 2029-30, while rates for higher-emitting cars double from April 20251. The 2030 and 2035 phase-out dates set the direction for new car sales, and the £200m for charging points in 2025-26 concerns the infrastructure that supports home and public charging1. The windfall tax rise and the carbon capture funding concern North Sea production and industrial emissions rather than domestic bills directly, and no effect on household energy bills is set out in the budget coverage1.
What happens next
The energy profits levy increase takes effect on 1 November 20241. The higher first-year vehicle excise duty rates for cars emitting more than 76g of CO2 per km apply from 1 April 20251. The bus fare cap rises to £3 after the current £2 limit expires in December1. The carbon border adjustment mechanism is due from 20271. The government will consult on extending the higher private jet duty rate to all private jets within the air passenger duty regime1.