Road Tax in 2026: What is Changing?

From 1st April 2026, major changes to UK road tax (Vehicle Excise Duty – VED) come into force, affecting petrol, diesel, hybrid, and electric cars.

While none of the updates are dramatic on their own, together they will impact millions of drivers, car buyers, and company car users—and could cost you more if you’re not prepared. Here’s everything you need to know and how to stay one step ahead.

10 Biggest Road Tax Changes and what they mean for you:

1. Standard road tax rises to £200 for most cars

2. Electric cars now pay full road tax – no longer £0

3. Luxury car tax threshold increases to £50,000 for EVs

4. You can save £425/year by choosing an EV under £50k

5. First-year tax on high-emission cars can exceed £5,000

6. Low-emission vehicles become more financially attractive

7. Company car tax (BiK) for EVs increases to 4%

8. Nearly new cars avoid the biggest tax hit (year one)

9. Timing your car registration could save money

10. Future pay-per-mile tax for EVs is planned from 2028

What Is Changing in April 2026?

Blue VW Golf R 20 years driving

1. Standard Road Tax Increases to £200

The flat annual VED rate (for most cars registered after April 2017) will rise:

  • From £195 → £200 per year
  • Applies to petrol, diesel, hybrid, and electric vehicles.

This affects almost every driver when they renew their tax.

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2. Electric Cars Now Fully Taxed

Electric vehicles (EVs) are no longer tax-free:

  • EVs already moved into the VED system in 2025
  • By 2026, most EV owners pay the standard £200 annual rate

This removes one of the biggest cost advantages EVs previously had.

Side view of Range Rover Velar

3. Expensive Car Tax Threshold Rises (Good News for EV Buyers)

The “luxury car tax” (Expensive Car Supplement) is changing:

  • Threshold increases from £40,000 → £50,000 for EVs
  • Saves drivers £425 per year (years 2–6) if under the new limit

This is one of the few money-saving changes in 2026.

Skoda Scala parked at a petrol station

4. First-Year Tax on High-Emission Cars Soars

If you’re buying a new petrol or diesel car:

  • High-emission vehicles (over 255g/km CO₂) can face up to £5,690 in first-year tax

This is designed to push buyers toward lower-emission options.

Business Man in suit

5. Company Car Tax (BiK) on EVs Increases

For company car drivers:

EV Benefit-in-Kind rises from 3% → 4%

Still cheaper than petrol/diesel—but slightly less generous.

What The Road Tax Changes Mean for Drivers

In simple terms:

  • Most drivers → small annual increase (£5)
  • EV drivers → now paying full road tax
  • High-emission buyers → significantly higher upfront costs
  • Company car users → slightly higher monthly tax

How to beat the 2026 Road Tax Changes

Here’s how smart drivers can minimise the impact:

byd atto 2 exterior in green

1. Choose Cars Under £50,000 (Especially EVs)

If you’re going electric:

  • Staying under £50k avoids the £425/year luxury tax
  • Could save £2,000+ over 5 years

This is one of the biggest savings opportunities right now.

2. Avoid High CO₂ Vehicles

First-year tax is now heavily emissions-based.

  • Lower emissions = much lower upfront tax
  • High-performance SUVs and large engines are hit hardest

Check CO₂ ratings before buying—it matters more than ever.

New Audi S3 Saloon grille

3. Consider Nearly New Instead of Brand New

The biggest tax hit is in year one.

Buying nearly new means:

  • First-year tax already paid
  • Lower purchase price
  • Same standard £200 rate after

This is a simple way to avoid the biggest increases.

Orange Car next to pot of coins

4. Time Your Purchase Carefully

If you’re buying:

  • Registering a car before April changes can sometimes reduce first-year tax
  • Especially relevant for high-emission vehicles

Speak to your dealer about registration timing.

5. Review Company Car Choices

If you’re on a salary sacrifice or company scheme:

  • EVs still offer the lowest BiK rates overall
  • But choosing a lower list price reduces tax further

Small changes in car choice can save hundreds per year.

What about Road Tax in the Future?

Looking ahead:

  • A pay-per-mile road tax system for EVs is planned from 2028
  • This means EV running costs could increase further over time

Need Help Choosing the Right Car?

At Swansway Motor Group, we can help you:

  • Find cars that minimise tax costs
  • Compare petrol, hybrid, and electric options
  • Choose vehicles that fit both your budget and lifestyle

Browse our latest stock!

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    Used

    £6,690

    Finance Available

    Affordable options for you

    2016 Mini Hatch

    1.5 Cooper Euro 6 (s/s) 3dr

    • 2016
    • DV16OGY
    • Petrol
    • Manual
    • 66,570 Miles
    • Silver
    Motor Match Crewe
    Go to Mini Hatch 1.5 Cooper Euro 6 (s/s) 3dr
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    Used

    £6,790

    Finance Available

    Affordable options for you

    2016 Audi A1

    1.6 TDI Sport 3dr

    • 2016
    • SC65YXG
    • Diesel
    • Manual
    • 70,253 Miles
    • Blue
    Crewe SEAT
    Go to AUDI A1 1.6 TDI Sport 3dr

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