1:53 pm, October 28, 2026
Chancellor John Healey has extended the fuel duty cut until July 2027 and announced fresh business rates relief in his first Autumn Budget – but car dealers are also facing another rise in employment costs.
Delivering his Budget in the House of Commons today (October 28), Healey promised to give businesses and households ‘breathing space’ as the economy continues to face pressure from rising costs.
Among the measures announced were an extension of the 5p-per-litre fuel duty cut, an increase in business rates relief for smaller premises and higher tax-free mileage allowances for motorists who use their own vehicles for work.
However, dealerships will also have to contend with a 3.9% increase in the national minimum wage and national living wage, potentially adding further pressure to already stretched profit margins.
The Chancellor confirmed that the existing fuel duty reduction would continue until July 2027, extending support for motorists amid higher fuel prices linked to the conflict in the Middle East.
He told MPs: ‘Earlier this year, the Government extended the 5p cut to fuel duty and slashed red diesel to its lowest rate in over 20 years.
‘With the war in the Middle East still driving high fuel prices, I am extending these tax cuts for motorists through the winter and spring to July, supporting households, hauliers, and farmers.’
Meanwhile, Healey announced an increase in the threshold for small business rates relief for retail, hospitality and leisure businesses from £12,000 to £18,000.
The Treasury says the change will remove another 70,000 businesses from paying rates altogether.
For other businesses within the eligible sectors, rates will be frozen in real terms for two years, meaning they will not face above-inflation increases.
Healey said: ‘That means, for 70,000 more businesses I’m not just cutting their rates, I’m taking them out of paying business rates altogether – meaning half of our shops, restaurants and gyms will now pay no business rates at all.’
However, it remains unclear whether motor dealerships will qualify for the expanded relief, with the detailed eligibility criteria yet to be established.
The Chancellor also announced that all business rates revenue will be retained locally by the end of the decade, with 20% going to mayors from next year.
Higher wage costs for dealers
Despite the measures aimed at reducing costs for businesses, the Budget also confirmed an increase in the minimum wage.
Both the national minimum wage and national living wage will rise by 3.9%, affecting an estimated 2.3 million workers across the UK.
For car dealers, the increase will add to employment costs, particularly for businesses employing lower-paid staff in roles such as vehicle preparation, valeting and administration.
The rise could also put pressure on pay differentials for employees earning above the statutory minimum.
The Chancellor said his financial plans were designed to support businesses of all sizes while maintaining control of the public finances.
He told MPs the Budget was built on three priorities, including ‘giving Britain some breathing space on the cost of living and the cost of business’ and ‘backing the enterprise of British business to unleash innovation and growth in every postcode’.
The Office for Budget Responsibility has forecast economic growth of 1.2% this year, falling to 1% in 2027 before recovering to 1.6% in 2028.
The Chancellor said his Budget was designed to give businesses and households ‘breathing space’ amid continued economic uncertainty.
He said the government’s priorities included reducing the cost of doing business and encouraging investment, while the Office for Budget Responsibility forecast economic growth of 1.2% this year, falling to 1% in 2027.
The Budget also confirmed that all business rates revenue will be retained locally by the end of the decade, with 20% going to mayors from next year.