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Why Is My Car Tax Going Up? Car Tax Changes 2026 Explained

From 1 April 2026, car tax rates across the UK are changing - affecting petrol, diesel, hybrid and electric vehicles alike. Here is everything you need to know.

If your Vehicle Excise Duty (VED) renewal has come through and the figure is higher than you expected, you are not alone. From 1 April 2026, car tax rates across the UK are changing - affecting petrol, diesel, hybrid and electric vehicles alike. Here is everything you need to know.

What Is Vehicle Excise Duty?

VED - also known as road tax or car tax - is the annual charge required to keep a vehicle on UK public roads. It is paid to the DVLA, and the amount you pay depends on several factors: your vehicle’s fuel type, its CO₂ emissions, the year it was first registered, and its original list price when new.

What Will Change From April 2026?

Standard Annual Rate

For most cars registered after 1 April 2017, the standard flat annual VED rate has risen from £195 to £200 - an increase of £5, in line with the Retail Price Index (RPI). This applies to petrol, diesel, hybrid and electric vehicles in this registration bracket.

First-Year Rates for High-Emission Vehicles

The bigger increases fall on vehicles with higher CO₂ emissions at the point of first registration. First-year VED rates, sometimes called the “showroom tax”, have risen significantly for the most polluting new cars. A car emitting more than 255g/km of CO₂ now faces a first-year rate of £5,690, up £200 from the year before. Even an average new petrol car (around 143g/km) carries a first-year charge of £560, rising to £1,360 for an average new diesel.

These steep first-year charges are designed to discourage the purchase of high-emission vehicles and push buyers towards cleaner alternatives.

Older Cars (Registered March 2001 to March 2017)

Vehicles in this bracket are taxed according to CO₂ emission bands rather than a flat rate. Most bands have risen modestly in line with inflation. Cars emitting between 226 and 255g/km will see annual VED rise to around £760, while those emitting more than 255g/km face approximately £790 per year.

Electric Vehicles - The End of Free Road Tax

April 2025 marked the end of the long-standing VED exemption for electric vehicles, and 2026 is therefore the first full year in which EV owners pay car tax at renewal. Most electric cars registered after April 2017 now pay the standard rate of £200 per year.

New zero-emission cars registered from April 2025 onwards pay a reduced first-year rate of just £10, before moving to the £200 standard rate from year two.

The Government’s rationale is straightforward: as EV numbers grow and fuel duty revenues decline, it is only fair that electric car drivers contribute to road maintenance alongside everyone else.

The Expensive Car Supplement - Good News for EV Buyers

There is one notable improvement for electric vehicle buyers in the 2026 changes. The so-called “luxury car tax”, officially the Expensive Car Supplement, adds £425 per year on top of standard VED for five years, for cars that exceeded a set list price when new.

From 1 April 2026, the threshold for zero-emission vehicles rises from £40,000 to £50,000. This means electric cars that cost between £40,000 and £50,000 when new will no longer be subject to the supplement, a meaningful saving of up to £2,125 over five years. For petrol, diesel and hybrid vehicles, the £40,000 threshold remains unchanged.

What About the Pay-Per-Mile Tax?

You may have heard about a new charge for electric and plug-in hybrid vehicles based on mileage. This is known as eVED (Electric Vehicle Excise Duty), and it has been confirmed in principle, but it will not come into effect until April 2028. Under the proposals, electric car drivers would pay 3p per mile and plug-in hybrid drivers 1.5p per mile - in addition to standard VED. The Government has confirmed that no tracking devices will be required; mileage is expected to be verified at MOT centres.

For now, this remains a future consideration rather than a current cost.


Company Car Drivers - Benefit-in-Kind Changes

If you receive a company car as part of your employment, Benefit-in-Kind (BiK) tax rates also change from 6 April 2026. Electric company cars move from a 3% BiK rate to 4%, continuing the gradual annual escalator. Conventional petrol and diesel cars face higher rates based on CO₂ emissions, rising to a maximum of 37% for the highest-emitting vehicles.

Despite the increase, electric company cars remain considerably more tax-efficient than their petrol equivalents - a 4% BiK rate compares very favourably with rates of 25-37% for conventional vehicles, making EVs still by far the most financially attractive choice for company car drivers.

Quick Summary of the Key 2026 Changes

Change

Detail

Standard VED rate (most cars post-2017)

Rises from £195 to £200

First-year rate - high-emission cars (255g/km+)

£5,690

First-year rate - zero-emission cars

£10

Expensive Car Supplement - EV threshold

Rises from £40,000 to £50,000

Expensive Car Supplement - petrol/diesel threshold

Unchanged at £40,000

Supplement annual charge

£425 (unchanged)

EV pay-per-mile (eVED)

Confirmed for April 2028, not 2026

BiK rate for electric company cars

Rises from 3% to 4% from April 2026

Is Now a Good Time to Change Your Car?

The timing of your next vehicle purchase or lease can make a meaningful difference to your motoring costs. First-year VED rates vary significantly by emissions band, and choosing a lower-emission or electric vehicle can save you hundreds of pounds in the opening year alone - before the ongoing running cost advantages of EVs are even considered.

If you are thinking about changing your car, our team at Richmond Motor Group is here to help you understand exactly what you would pay in VED for any vehicle you are considering, and how the full cost picture compares across fuel types.

Browse our latest stock or get in touch with your nearest Richmond dealership - we are happy to talk you through your options.

VED rates are set by the Government and administered by the DVLA. Rates shown are for the 2026-27 tax year from 1 April 2026 and are subject to change in future Budgets. Always verify your specific vehicle’s rate at gov.uk/vehicle-tax-rate-tables.

Visit your nearest Richmond Motor Gropu dealership today.

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05 March 2026

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