Budget 2025 brought a fairly steady outlook for motorists, with no major shocks for classic or modern-classic owners. While many announcements focused on the wider economy, several measures will shape the cost of running and maintaining older vehicles over the next year.

Here’s what matters most to the classic community.

Fuel Duty Frozen Until September 2026

The Government has confirmed the fuel duty freeze will continue until September 2026, with the temporary 5p-per-litre cut remaining in place.

Why this matters to classic owners

• Classic and retro engines typically drink more fuel

• Show visits, club runs and touring remain affordable

• Hobby mechanics road-testing restorations aren’t hit by sudden fuel spikes

This is one of the most directly relevant Budget measures for classic car owners.

Rising Labour Costs May Lift Workshop Prices

From April 2026, the National Living Wage increases from £12.21 to £12.71 per hour.

Impact on the classic sector

Independent garages & restorers:
Higher wages may push workshop labour rates up, especially for welding, fabrication, carburettor tuning, paintwork and engine rebuilds.

Owners who outsource maintenance:
If you rely on classic specialists for MOT prep or ongoing servicing, expect gradual pricing changes rather than immediate jumps.

Hobby mechanics:
A continued shift to DIY maintenance is likely, especially among modern-classic owners keeping costs tight.

Energy Cost Changes Help Home Garages

The Budget includes the removal of certain energy levies from April 2026, offering typical households around £150 of annual savings.

For many enthusiasts, garages and small workshops rely on heaters, power tools, compressors and lighting. Lower household energy pressures help offset the ongoing cost of projects.

No Change to Corporation Tax or Employers’ NI

For automotive businesses — classic restorers, part suppliers, mobile mechanics or specialist dealers — the Budget confirmed no changes to:

• Corporation tax

• Employer National Insurance

This gives stability to niche businesses in the classic sector where margins are often tight.

Dividend Tax Changes May Affect Specialist Traders

Dividend tax rises by two percentage points from April 2026.

This mainly affects limited-company directors such as:

• Classic car dealers

• Modern-classic traders

• Parts importers

• Restoration shops

Sole traders are unaffected.