UK chancellor Rachel Reeves has unveiled a 2025 Autumn Budget that aims to cut the cost of living.
With pledges on infrastructure investment, business rates, vehicle taxation and customs reform, the 2025 autumn budget is expected to have wide-ranging implications for the logistics and supply chain industry.
Upgrading the UK’s economic growth this year to 1.5% from 1% in the Spring, the Office of Budget Responsibility (OBR) said the choices taken in the Budget would reduce inflation to 0.4% next year and cut government borrowing “faster than any other G7 country”.
Here Logistics Manager outlines several key pledges, alongside industry reaction.
Infrastructure investment and planning reform
On infrastructure, Reeves has promised to build roads and homes, “getting spades in the ground and cranes in the sky”.
The government has committed to investing £891 million in the Lower Thames Crossing, as well as funding for city region transport with the Midlands Rail Hub and the Transpennine Route Upgrade.
It has also pledged £2 billion per year for local authorities to repair potholes on their roads by 2029-30.
Reeves has also announced her support to the expansion of London’s Heathrow and Gatwick airports, plus the construction of the Sizewell C nuclear power plant in Suffolk.
James Craddock, UK managing director at property company SEGRO, welcomed the forecast that inflation will come down, along with the chancellor’s announcement to fund additional planners to speed up the delivery of building and infrastructure projects.
Some £48 million has been allocated to increase planning capacity, including the hiring of 350 new planners nationwide. Alongside planning reform, this measure is expected to reduce delivery timelines for major infrastructure projects by up to 12 months.
“The Budget’s focus on infrastructure, innovation and productivity sends an important message that the UK is competing for global capital not just waiting for it,” commented Nik Potter, associate, commercial research at real estate company Knight Frank.
This strategic investment also “unlocks confidence and keeps the door open for private sector opportunities, particularly into real estate sectors”.
Potter warned that a slower economic backdrop in 2026 may test sentiment. Today, however, the fundamentals of UK commercial real estate “remain strong,” with the country currently the top destination for global commercial real estate capital.
Business rate rises set to impact distribution hubs
The 2025 budget announced lowering of tax rates for small- and standard-sized properties in the retail, hospitality and leisure sector, with a 5p drop in multipliers. However, this will be offset by a higher rate on properties worth more than £500,000, which is being raised by 2.8p to 50.8p.
As a result of this increase, 1,900 distribution warehouses are expected to contribute an additional £270 million in 2026/27 and 2028/29.
“This will levy an additional tax burden on businesses in large industrial buildings across the country, including our customers in retail, manufacturing, data centres, life sciences and other key Industrial Strategy sectors, and will impact on inward investment and growth,” said Craddock.
Additionally, as logistics premises require a larger footprint but offer a relatively low return on land values, the Road Haulage Association (RHA) has warned that the proposed changes will result in higher prices for the transportation of goods.
Scrapping of de minimis exemption to raise £500m
As part of the Autumn Budget 2025, the chancellor confirmed that the government will remove the customs duty relief on goods imported into the UK valued at under £135.
The government intends to implement these reforms by March 2029. It has launched a public consultation on the proposals, which runs until 6 March 2026.
Claire Williams, partner, head of UK & European industrial research at Knight Frank said the move creates “a strategic window of opportunity for the logistics sector.”
“The demise of de minimis threshold won’t just raise revenues, it will reroute supply chains through Britain’s warehouses and act as a catalyst for expansion of onshore fulfilment and logistics networks,” she added.
The government expects to raise around £500 million annually once the rule is phased out.
Additionally, as supply chains move away from fragmented small-parcel inflows towards consolidated shipments it is expected to “stimulate demand for domestic logistics space, generate jobs, and give operators confidence to invest in new facilities, automation and inventory strategies,” Williams said.
From a technology perspective, supply chain operators will need systems that ensure each shipment is reported, correctly classified and taxed in the destination market, according to Gunjan Tripathi, EMEA director of VAT & Tax Technology.
Fuel duty rises and new per-mile charges for EVs
As expected, the government is extending the 5p fuel duty cut until the end of August 2026, with rates set to gradually return to March 2022 levels.
The chancellor’s plans envisage increasing fuel duty by 1p from September 2026, 2p from December 2026, and a final 2p from March 2027. These measures reverse the 5p cut made in 2022 and will mark the first increase in fuel duty in 16 years.
The government is also introducing Electric Vehicle Excise Duty (eVED), a new mileage-based charge for electric and plug-in hybrid cars from April 2028. Drivers will pay for their mileage at a rate of 3p per mile, alongside their existing VED.
According to the treasury, the tax paid by EV drivers will be around half the fuel duty rate paid by the average petrol/diesel driver. When the eVED takes effect “an average EV driver will pay around £240 per year or £20 per month,” it added.
The HGV levy and VED duty will both increase by inflation from April 2026. The RHA described this as “a disappointing change”, noting that with near-record insolvencies in the sector, it will continue to add pressure on operators.
Broadly, the logistics sector has expressed concern about the fuel duty increase, given that freight movement is still mostly diesel powered. According to industry data, logistics companies pay £6.3bn a year in fuel duty, with the rise set to add a further £480m to industry costs. This comes at a time when “industry is already operating on razor-thin margins,” according to RHA.
The Society of Motor Manufacturers and Traders said that a pay-per-mile tax on EVs “would be entirely the wrong measure at the wrong time” given the UK is at a pivotal moment in the EV transition.
Flora Harley, partner, head of energy & sustainability research at Knight Frank added: “The pay-per-mile tax on EV drivers seems inconsistent with the zero-emissions mandate and EV grants designed to accelerate adoption. While intended to offset lost fuel duty, the timing feels counterintuitive.”
Boost for R&D and apprenticeships
On a positive note, the 2025 autumn budget continues to provide for R&D tax relief.
Ed Nappier-Fenning, business strategy director at Balloon One noted that these incentives, and related capital-allowance options, “can significantly reduce the cost of developing new solutions or improving operational processes.”
The government also made some positive announcements on apprenticeships, including plans to start fully-funding apprenticeships for under 25s in small and medium enterprises.
Prior to the budget announcement, the British International Freight Association was calling for increased support for customs and logistics workforce development, such as “expanded and simplified access to apprenticeships and funded training, including customs compliance and digital skills”.
