As 2025 begins, UK drivers face several regulatory changes that could affect their wallets and driving habits. While the country welcomes a new government under Labour's leadership, motorists will need to adjust to new policies across various sectors, from fuel reimbursements to car insurance.
The UK government is reviewing the personal injury discount rate for car insurance in England and Wales, which could lead to an average savings of around £50 per year for policyholders.
Mohammad Khan, head of general insurance at PwC UK, noted that this change should enhance the competitiveness of the motor insurance market. He added that insurers were likely already factoring this adjustment into their pricing.
"As for the insurance companies, they had expected a change of this scale and will already be pricing it into their pricing," said Khan.
Another notable update involves Advisory Fuel Rates, which dictate how much employees can be reimbursed for business-related travel in company cars.
Set by HM Revenue and Customs, the updated rates for the first quarter of 2025 see a reduction of 1p per mile across all petrol and diesel vehicles. For example, drivers of diesel cars with engines under 1,600cc will receive 11p per mile, while those with petrol cars over 2,000cc will get 23p. Electric vehicle drivers, meanwhile, will receive 7p per mile, a rate consistent with the one set for liquid petroleum gas vehicles.
Additionally, the government is moving forward with adjustments to the Zero-Emission Vehicle Mandate, which could provide more support for the automotive industry. This follows job cuts by companies like Ford and Stellantis in the UK. The 2030 ban on new petrol and diesel cars is expected to remain in place, although stricter quotas that could result in fines of up to £1.8 billion for car manufacturers in 2024 may be replaced or adjusted into a deficit system.
Finally, from December 31, 2024, heavy goods vehicle (HGV) drivers planning to travel outside the UK will need to retrofit their trucks with a full or transitional smart tachograph 2. This new device ensures better compatibility with modern technology and helps prevent fines. HGVs used solely within the UK can continue to operate with standard analogue or digital tachographs.
As these changes take effect, how do you think they will impact your driving habits or expenses in 2025? Share your thoughts in the comments below.
