UK car tax changes 2026 - what you need to know

What are the new car tax changes?

Car tax can be a confusing topic for us here in the UK. In this article, we look at the car tax changes outlined in the Autumn Budget by the Chancellor and break down what you need to know for the changes coming in April 2026.

The new amount will be calculated by type of fuel, CO2 and the date of vehicle’s first registration.

Electric car tax changes

The main point for drivers to note is that, from 1st April 2026, the expensive car tax supplement threshold will increase from £40,000 to £50,000 for new EVs.

EVs with a list price that exceeds £50,000 and are registered after 1st April , 2025, will incur an additional £440 a year on their VED from 1st April 2026, increasing the cost to £640 annually.

The way EVs and hybrids (PHEVs) are taxed is set to change as of April 2028 with the new eVED, (Electric Vehicle Exercise Duty). EV and PHEV owners will pay per mile with the new government scheme. The amount is set to be 3p per mile for full electrics and 1.5p for plug-in hybrids. This will be in addition to standard VED for the vehicle. There has yet to be confirmation as to how this will be measured or tracked or who will perform the checks, but there is speculation that the MOT process will be involved in some way.

You will be required to make a one-off payment for six or 12 months of road tax or pay in monthly instalments. Monthly instalments can be paid via a Direct Debit on the vehicle tax website, at a Post Office or by phone. If you pay for six months tax, the amount paid will be £110, if paying for Direct Debit the cost will be £105, this will be £210 for 12 months.

If you're looking to transfer road tax to a new owner when you're in the process of buying or selling an electric car, there are no changes to the current set-up, except for the new owners, who will need to tax the car from scratch. There are also no changes to registering an EV as off-road (SORN).

Road tax changes can be changed by the UK Government at any point. It's always recommended to check your vehicle's road tax band to get accurate rates for your car at that time.

While electric vehicle owners will now have to pay annual road tax, this shouldn't deter drivers from thinking about making the switch to electric.

At Arnold Clark, we have many great deals and incentives for customers looking for an EV as their next car.

Thanks to our partners at Bumblebee, home charging, often the preferred and most convenient method of charging for EV owners, is made simple, with their ability to install a home charger within 14 days.

Plus, with the roll-out of Arnold Clark Charge, our customers can take advantage of preferential rates and bookable charging slots at one of our 500 ultra-rapid chargers located across the UK.

DVLA electric car tax changes 2026

As of April 2026, the VED rules change for electric, zero or low-emission vehicles:

• Registered on or after 1st April 2025:

  - From 1st April 2026, you will pay the first-year lowest rate of tax which is £10. Every year thereafter you pay a standard rate of £200 per annum.

  - From 1st April 2026, if the list price of an EV is over £50,000, it will now incur the Expensive Car Supplement (ECS) charge of £440 per annum for the first five years, in addition to the standard £200 rate.

• Registered between 1st April 2017 and 31st March 2025:

  - From 1st April 2026, you will pay the standard tax rate, which is £200 per annum.

• Registered between 1st March 2001 and 31st March 2017:

  - From 1st April 2025, these vehicles will shift to first band VED tax, which is £20 per annum. This is a move from Band A to Band B rate.

Vans road tax is also set to increase along with other EVs and will move to the same rate for petrol and diesel fuelled light good vehicles at an amount of £360 per annum.

New petrol and diesel car tax changes 2026

The rates for petrol, diesel and AFVs are also changing. Again, the rates depend on year of registration and CO2 emission output. Below is a breakdown of annual new car tax bands for cars registered on or after 1st April 2017:

VED rates for cars registered between 1st March 2001 and 31st March 2017:

The Expensive Car Supplement (ECS)

Since 2017, registered keepers of cars with a list price of more than £40,000 when purchased from new are mandated to pay a surcharge on VED which is known as the Expensive Car Supplement (ESC) or ‘luxury car tax’ informally. The threshold has increased to £50,000 for EVs in April 2026.

The ESC surcharge has increased to £440, which is paid each year for the first five years of ownership.

However, at Arnold Clark, we have plenty of new electric cars under £50,000 for you to choose from if this is something you are concerned about when it comes to choosing your next car.

If you do end up purchasing a new car with a list price over £50,000, don't panic! We have broken the costs down for the first five years in the table below:

Cars registered on or after 1 April 2026 VED + ECS rates (first five years)

New car tax changes with real-life examples

It's April 2026 and time for a new car. You've got your heart set on a new EV and your budget is £60,000. You choose the new Kia EV6 for £60,035, so your car tax would be as follows:

• Year 1: £10 VED + £440 ECS = £450
• Year 2: £200 VED + £440 ECS = £640
• Year 3: £200 VED + £440 ECS = £640
• Year 4: £200 VED + £440 ECS = £640
• Year 5: £200 VED + £440 ECS = £640
• Year 6 and thereafter: £200 VED

It's worth mentioning that you could also choose to lease a new car. When you choose to lease, your VED costs are built into your monthly rental agreement, which someone else deals with for you. If this sounds like something you would be interested in, check out Arnold Clark Leasing.

Car tax exemptions

Some drivers in the UK may be exempt from road tax, such as individuals with disabilities, historic vehicles and specialised agricultural vehicles. Please ensure you check with the DVLA for the most accurate and up-to-date information on VED exemptions. Not taxing your vehicle without permission or a valid reason can lead to legal issues.

Conclusion

These changes come into effect on 1st April 2026 and will impact motorists across the whole of the UK. The most significant change to note is that registered keepers of EVs, zero and low-emission cars, motorcycles and vans will now pay tax in the same way petrol and diesel car owners do, including the ECS surcharge.