The Electric Car Grant will run until 2029-30, the autumn budget announced on 26 November 2025. The scheme, which offers up to £3,750 off eligible electric vehicle models, was introduced in July 20251. The budget also announces an increase of £1.3bn in funding for the programme, as well as an extension out to 2029-302.
The grant sits alongside other motoring measures in the budget. From April 2028, electric and plug-in hybrid cars will pay an extra mileage-based tax, called Electric Vehicle Excise Duty (eVED)1. The rate will be 3p per mile for battery electric vehicles and 1.5p per mile for plug-in hybrid cars2. The budget red book says this will mean the average driver of a battery electric vehicle paying around £240 per year, roughly half the rate of fuel duty paid per mile by petrol and diesel car owners2. Drivers will pay eVED on top of regular VED, integrated into a single annual car tax payment1. A consultation will be published seeking views on implementation, and there will be no requirement to report where or when miles are driven, or to install trackers in cars2.
The threshold at which new electric cars pay the higher rate of car tax, the expensive car supplement, will rise from £40,000 to £50,000 from April 20261. The Energy Saving Trust says this should save around £440 a year for drivers of those higher value EVs1.
The budget also set out changes to energy bills. The Treasury will cover three-quarters of the cost of the Renewables Obligation for households for three years from April 2026, cutting bills by £70 per year2. The Energy Company Obligation will end in April 2026, which the Energy Saving Trust says will lower typical average energy bills by £59 a year1. Carbon Brief puts the ECO saving at £63 per year2. The two organisations give different totals for the combined effect: the Energy Saving Trust says the measures aim to lower average energy bills in Great Britain by £154 a year from April 20261, while Carbon Brief says the total impact for typical dual-fuel households is an average of £134 per year over the three years to April 2029, rising to £154 when including households using electric heating and not connected to the gas grid2.
An extra £1.5bn was announced for the Warm Homes Plan, to cover the additional cost of taking over from ECO2. The Energy Saving Trust notes that ECO funding was £6.4bn over this parliament, so even with the uplift this still means a reduction in the total package of funding for home upgrades1.
"While immediate action to reduce energy bills will be welcome news for many households, it's disappointing that this choice will result in a significant reduction of the funding available to permanently lower bills and make homes warmer."
The government will also invest an extra £100m into creating more EV chargepoints in homes and workplaces, on top of the £400m already committed in the 2025 Spending Review1.
Why it matters for households
For a household weighing up an electric car, the grant extension gives a longer window in which up to £3,750 is available off eligible models1, but the same budget sets a mileage charge from April 20281. The Energy and Climate Intelligence Unit says EVs should still be £1,000 cheaper to run per year than petrol cars after the 3p per mile charge1. The higher expensive car supplement threshold from April 2026 reduces the annual car tax bill for new EVs listed between £40,000 and £50,0001.
On home energy, the shift of Renewables Obligation costs from bills to taxation lowers the levy portion of electricity bills, which matters for homes using electricity for heat or charging2. The end of ECO removes a funding route for energy efficiency measures in low income homes, with the Warm Homes Plan named as the replacement1. The Energy Saving Trust says households currently having work done under ECO should still see it go ahead1. The Energy Saving Trust also says the publication of the Warm Homes Plan has been delayed, and that it needs to set out how the government will meet its target of upgrading up to five million homes1.
What happens next
The ECO scheme ends in April 20261. The expensive car supplement threshold rises to £50,000 in April 20261. The Renewables Obligation funding arrangement runs for three years from April 20262. A consultation on eVED implementation is to be published2. The mileage charge takes effect in April 20281. The Electric Car Grant runs to 2029-301. The Warm Homes Plan has not been published, and no date for it has been reported1.
Sources2 cited
- Autumn budget 2025: our response - Energy Saving Trust, energysavingtrust.org.uk
- UK budget 2025: Key climate and energy announcements - Carbon Brief, carbonbrief.org