UK Car Tax Changes 2026 – How Much VED Is Rising and Which Vehicles Are Affected?

Significant updates to Vehicle Excise Duty (VED) took effect on 1 April 2026, driven by provisions established in the Autumn Budget and finalized in the Spring Statement.

For the vast majority of motorists driving petrol, diesel, hybrid, or electric vehicles registered after April 2017, the annual standard road tax rate has risen to a flat £200.

The most dramatic financial adjustments target high-emission models and brand-new registrations. Vehicles emitting over 255g/km of CO₂ face a first-year “showroom tax” hike up to £5,690.

Meanwhile, electric vehicles (EVs) are fully integrated into the national taxation grid, introducing a £10 first-year fee before transitioning to the standard £200 annual rate.

Key Takeaways for UK Drivers:

• Standard VED Inflation Adjustments: The annual baseline vehicle tax increases from £195 to £200 for post-2017 passenger cars.
• New Luxury EV Surcharge Thresholds: The list price threshold for the Expensive Car Supplement (luxury car tax) rises from £40,000 to £50,000 specifically for zero-emission electric vehicles. EVs priced above £50,000 must pay an additional £440 annual supplement for five years, bringing their total annual bill to £640.
• Stable Thresholds for Combustion Engines: Traditional petrol, diesel, and hybrid cars maintain the stricter £40,000 threshold for the Expensive Car Supplement, carrying the same £440 annual surcharge if they exceed that price when new.
• Electric Company Car Tax Increases: From 6 April 2026, corporate drivers utilizing salary sacrifice or fleet incentives will see the electric Benefit-in-Kind (BIK) rate climb from 3% to 4%.
• Strict Enforcement Measures: The Driver and Vehicle Licensing Agency (DVLA) monitors compliance digitally through a nationwide network of Automatic Number Plate Recognition (ANPR) cameras. Driving without valid road tax or failing to declare a Statutory Off Road Notification (SORN) carries out-of-court settlements, immediate vehicle clamping, and potential magistrates’ court fines reaching up to £1,000.
• Future Mileage Tax Projections: The government continues to lay the administrative groundwork for a pay-per-mile Electric Vehicle Excise Duty (eVED) system scheduled for April 2028, tracking at a projected 3p per mile for EVs and 1.5p per mile for plug-in hybrids.

Why Is the UK Government Introducing Major Car Tax Changes in 2026?

The UK government has introduced sweeping car tax changes in 2026 to accelerate the shift towards cleaner transportation.

Central to this move is a stronger financial distinction between zero-emission electric vehicles (EVs) and traditional petrol or diesel cars.

Chancellor Rachel Reeves emphasised that the changes are designed to:

• Encourage consumers to adopt electric vehicles
• Penalise high CO2-emitting models with significantly higher first-year Vehicle Excise Duty (VED)
• Support climate targets by phasing out older, polluting vehicles

With London’s Ultra Low Emission Zone (ULEZ) already enforcing strict emission rules, these national changes are in alignment with broader environmental goals.

 “To help drive the transition to electric vehicles, the government is strengthening incentives to purchase EVs by widening the differentials in VED.” – Chancellor Rachel Reeves

The government is also addressing lost fuel duty revenue from EVs, setting the stage for a new mileage-based tax system from 2028.

What Are the Key Changes to Vehicle Excise Duty (VED) in 2026?

Vehicle Excise Duty (commonly referred to as car tax or road tax) is rising across the board in 2026. The aim, according to Chancellor Rachel Reeves, is to push drivers towards electric vehicles while penalising high-emission petrol and diesel cars.

VED Rate Increases – What’s New?

From 1 April 2026, all cars will be taxed based on tailpipe emissions and value, with significant hikes in both first-year and annual rates for higher-emission models.

2026 First-Year VED Rates Based on Emissions:

These rates are only for the first year. After that, most cars pay the standard rate of £200 annually (up from £195). Vehicles over £40,000 (or £50,000 for EVs) attract an additional £440 “luxury car” supplement for five years.

Which Cars Will Be Most Affected by the New VED Rates?

The impact will be widespread, but especially severe for owners of older, higher-emission vehicles, including many previously popular family models.

Real-World Example: Family Cars Facing the Axe

I spoke to a dealer in Kent who told me:

“We’ve stopped stocking models like the Ford Mondeo V6 – nobody wants to pay £760 a year just to keep it on the road. It’s not about luxury, it’s about affordability.”

These aren’t exotic cars, they’re the kind you see parked on every other street in London and beyond. Yet they’re becoming financially unsustainable.

Cars Facing VED Charges of £735–£790 from April 2026

Many of these vehicles are either being scrapped or exported because their VED now rivals or exceeds their resale value.

What Is the Full List of 59 Cars Affected by the New VED Hike?

The government has released a comprehensive list of 59 cars that will face the £5,690 first-year tax from April 2026. This includes vehicles across multiple classes and performance categories, with some surprising entries that affect everyday consumers, not just supercar enthusiasts.

Below is the complete list of vehicles facing the £5,690 first-year car tax from April 2026:

59 Cars Affected by the £5,690 First-Year VED (2026)

These vehicles are subject to the tax due to their high CO₂ emissions and, in many cases, high list prices. Interestingly, many of these models also face the £440 annual “Expensive Car Supplement” for five years post-purchase.

How Will Older Cars Registered Between 2001 and 2017 Be Affected?

If you own a car registered between March 2001 and April 2017, you’re not exempt from the 2026 tax hikes. The government is adjusting annual VED rates based on CO₂ emissions, hitting older models still in regular use.

Key changes to note:

• Vehicles emitting 226-255g/km will see tax rise from £735 to £760
• Those emitting over 255g/km will jump from £750 to £790
• Other bands will also see £10-£25 increases across the board

Here’s an example of how this impacts typical models still on UK roads:

A 2005 Volkswagen Golf R32 will attract £760 per year, while a Ford Mondeo V6 will incur £735-£760, depending on registration and engine specs.

This shift has already led to mass scrappage of older family cars whose tax bills rival their market value.

As Wayne Lamport, a Kent-based car dealer, told The Telegraph:

“We have to be very careful when we buy stock which is 2006 or more recent. Cars such as a Jaguar X-Type are great, but who wants to pay more than £700 for the annual tax? It doesn’t take many years of ownership to spend the value of the car.”

What Are the Changes to the “Luxury Car Tax” and How Do They Impact EVs?

The Luxury Car Tax, officially the Expensive Car Supplement, is also being tweaked. As of April 2026, this additional £440 annual tax will continue to apply to vehicles with a list price over £40,000, except for one crucial change: Electric Vehicles (EVs) now have a higher threshold.

Here’s what’s changing:

• Petrol/Diesel/Hybrid vehicles: Still taxed above £40,000
• EVs: Threshold rises to £50,000
• The £440 supplement applies annually for five years after the first year, totaling £2,200 extra.

This provides some relief for EV buyers, especially those choosing mid-range models that previously hovered just over the limit. For instance, a £48,000 electric SUV like the Hyundai Ioniq 5 would now escape this penalty, whereas a similarly priced petrol SUV would not.

This move is intended to incentivise EV uptake without disproportionately taxing mainstream electric cars, particularly in London, where EV ownership is growing rapidly due to cleaner air policies.

What Will Change for Electric Vehicle Owners in 2026 and Beyond?

The tax advantages long enjoyed by electric vehicle (EV) owners have come to an end as the UK government reshapes how road tax is applied.

EVs are no longer exempt from Vehicle Excise Duty (VED). Instead, owners pay a £10 first-year rate followed by a standard £200 annual charge, bringing EVs completely in line with petrol and diesel cars.

Higher-value EVs priced above £50,000 will also become subject to the Luxury Car Tax, increasing ownership costs further.

Looking ahead, a new pay-per-mile road tax is planned from April 2028 for EVs and plug-in hybrids. Proposed rates are 3p per mile for EVs and 1.5p for plug-in hybrids, meaning drivers covering 10,000 miles a year could pay around £300 annually.

Understanding 2026 Electric Company Car Tax Changes

It is not just private motorists who are affected by the new regulations; business users and fleet managers must also prepare for changing costs.

From 6 April 2026, the Benefit-in-Kind (BIK) rate for fully electric company cars will rise from 3% to 4% for the 2026/27 tax year.

This flat rate increase is part of a wider scheduled, phased update to EV company car tax rates. Traditional petrol, diesel, and hybrid company car BIK rates will continue to be calculated based on their specific carbon dioxide emissions bands rather than shifting by a flat percentage.

How Can UK Drivers Prepare for the 2026 VED Reforms?

Navigating the upcoming 2026 car tax changes will require UK drivers to reassess their motoring budgets, vehicle choices, and usage habits. Whether you’re buying a new car, hanging onto an older one, or transitioning to electric, preparation is key.

Here’s how you can start planning:

• Review your car’s CO₂ emissions and expected VED band
• Consider whether your car falls under the Luxury Car Tax threshold
• Calculate long-term ownership costs, including future mileage tax for EVs
• For Londoners, factor in ULEZ, congestion charges, and these national taxes
• If you’re planning a new purchase in 2025-2026, evaluate total tax liability, not just the sale price

For some, it may make financial sense to keep an older car running, especially if it’s taxed on engine size alone and well-maintained. Others may benefit from switching to a tax-efficient EV before rates shift again.

By taking a proactive approach now, you can avoid the financial shock that many motorists may face come April 2026.

What Happens If You Drive Without Tax or Failure to Declare SORN?

Driving an untaxed vehicle on public roads in the UK carries severe penalties now that physical tax discs are no longer used and the police rely heavily on Automatic Number Plate Recognition (ANPR) cameras.

If you are caught owning or driving an untaxed vehicle without a valid Statutory Off Road Notification (SORN), the financial consequences include:

• An official Late Licensing Penalty letter carrying a fine of £80, which can be reduced to £40 if paid within 33 days.
• An Out of Court Settlement letter requiring a payment of £30 plus one-and-a-half times the outstanding vehicle tax rate owed.
• Magistrates’ court prosecution if out of court settlements are ignored, resulting in maximum fines of up to £1,000 or five times the amount of tax chargeable.
• A maximum penalty of £2,500 if you are caught actively using or keeping a vehicle on a public road after you have already declared a SORN.
• Immediate vehicle clamping, which requires a £100 release fee within the first 24 hours, increasing to a £200 removal fee plus a £21 daily storage fee if the car is impounded.

Conclusion

The 2026 Vehicle Excise Duty reforms mark a definitive shift in the UK’s motoring landscape, permanently ending the tax-free era for electric vehicles and heavily penalizing high-emission models.

With standard rates tracking higher and luxury car supplements adjusted to squeeze premium budgets, drivers must actively calculate total long-term ownership costs rather than just the initial shelf price.

Navigating these changes requires a proactive approach; matching your vehicle choice to the current regulatory thresholds is now the only definitive way to protect your motoring budget from an unexpected financial shock.

Frequently Asked Questions

Is car tax increasing in 2026?

Yes, the standard annual road tax rate for post-2017 vehicles is increasing to a flat £200, and historic zero-emission exemptions for electric vehicles are officially ending.

How much is car tax going up in April?

The standard annual rate rises by £5 from £195 to £200, while the highest-emission brand-new cars will see a major first-year showroom tax increase of £200, bringing it up to £5,690.

What cars will be affected by the new road tax?

Virtually all UK drivers face changes, but the heaviest financial impacts target electric vehicle owners losing their tax-free status, buyers of luxury vehicles over £40,000 (or £50,000 for EVs), and high-emission models producing over 255g/km of CO₂.

What tax changes are expected in 2026?

Key shifts include standard VED inflation adjustments, new luxury tax pricing thresholds, an electric company car Benefit-in-Kind (BIK) rate increase to 4%, and full VED integration for electric vehicles.

What is the 2026 price threshold for the Expensive Car Supplement?

The luxury car tax threshold remains £40,000 for petrol, diesel, and hybrid cars, but it has been increased to £50,000 exclusively for zero-emission electric vehicles.

What is the fine for driving an untaxed vehicle without a declared SORN?

Failing to tax a car or register a Statutory Off Road Notification can result in an £80 automated fine, vehicle clamping, or a court prosecution penalty of up to £1,000.

When does the pay-per-mile electric vehicle tax begin?

The UK government is preparing a mileage-based Electric Vehicle Excise Duty (eVED) system scheduled to take effect in April 2028, tracking at a projected 3p per mile for EVs.