Chancellor John Healey has delivered his first Autumn Budget amid mounting pressure to tackle the rising cost of living and ease the burden on businesses. From higher tax-free mileage rates to minimum wage increases, here are the key announcements for electrical contractors
Tax-free mileage rates increased
Electrical contractors who use their own vehicles for work are set to benefit from changes to tax-free mileage rates. The Government is making the 55p-per-mile rate for the first 10,000 business miles permanent, while increasing the rate for mileage above that threshold from 25p to 35p per mile.
The changes are expected to benefit around three million employees and self-employed people who use their own vehicles for work. The rates determine how much employers can reimburse employees tax-free for qualifying business mileage in their own vehicles. They are also used by self-employed workers claiming tax relief through simplified motoring expenses.
However, the changes do not require employers to increase the mileage payments they make, meaning the benefit will depend on individual arrangements.
Fuel duty and energy costs
Fuel costs remain a significant expense for electrical contractors travelling between jobs and transporting tools and equipment. The Budget includes a further freeze on fuel duty until at least July 2027, providing some protection against increases in the cost of petrol and diesel.
The Government has also announced plans to abolish standing charges on domestic gas bills from 2027, or as soon as possible afterwards. The change is expected to save the average household up to £50 a year.
Becky Lane, CEO of home energy renovation company Furbnow, says reducing standing charges could “make a real difference” to households on tighter budgets, particularly those who already use very little energy.
“But we need to look at where those costs go. If they’re simply added to the price of each unit of energy, families living in larger, older or poorly insulated homes could end up paying more,” she adds.
Investment could create opportunities
The Budget also includes more than £20 billion in additional support for state-backed business and infrastructure lenders, with investment intended to support areas including green energy, artificial intelligence, defence and infrastructure.
For electrical contractors, the significance will depend on how this funding is deployed and whether it translates into new projects and contracts. Investment in energy infrastructure, renewable generation and wider electrification could create opportunities for businesses involved in electrical installation, power distribution, energy management and associated technologies.
Warren Abbey, CEO of 365 Finance, believes today’s Budget “did little to improve funding options” for established SMEs. “The Government seems to have fallen into the trap of directing funding purely to early-stage companies and innovation sectors,” he adds.
“Yes, injecting capital into such companies is clearly important, but so is supporting the established independent retailers, cafés, pubs and restaurants that employ local people and keep high streets active. Business rates relief is a step forward, but commitment to more SME financing options would also have been welcomed.”
Greg Jackson, Founder and CEO of Octopus Energy, says: “The government is right to support the development of the UK heat pump industry. With companies and public sector working together, we can continue the path of innovation and cost-reduction that will enable us to reduce Britain’s dependency on gas – a critical plank to improve our security and reduce heating bills.
“Moreover, this creates a secure future for the thousands of skilled professionals who’ve trained to install heat pumps and manufacture them here in Britain. This is a great example of the Prime Minister’s “good growth in every postcode”.”
Wage costs and the workforce
The Chancellor announced a 3.9% increase in the National Minimum Wage and National Living Wage, affecting around 2.3 million people.
Higher minimum pay rates can increase employment costs for smaller contractors, particularly where firms need to maintain differentials between entry-level roles and more experienced workers. For employers, the overall effect will depend on the rates applying to their workforce, alongside other employment costs and the ability to pass higher costs through to customers.
Warren adds, “People need to be paid fairly. Inflation continues to rise, and energy costs are soaring just as winter approaches. But the government cannot give with one hand and take with the other – it is absolutely right that minimum earnings are driven up, but this is why the business rates policies were so important. Namely, increasing Small Business Rate Relief and freezing business rates across the board.”
What does the Autumn Budget mean for electrical contractors?
The Budget offers some targeted support for people who drive for work, while longer-term investment in infrastructure and green energy could provide opportunities for firms across the electrical supply chain.
For electrical contractors already facing pressure from wages, materials, vehicle expenses and energy costs, the key question is whether the measures announced will provide meaningful relief while supporting a stronger pipeline of work.
