British motorists are being advised to brace for a significant financial shake-up as the government introduces a series of Vehicle Excise Duty (VED) hikes starting from 1 April 2026. Following the measures set out in the recent Budget, the tax gap between zero-emission vehicles and traditional petrol or diesel cars is set to widen even further.
Whether you are eyeing a brand-new motor or maintaining an older one, here is how the 2026 tax changes will affect your bank balance.
The £5,690 “Polluter Tax”
The most dramatic headline from the 2026 updates is the steep rise in First-Year Rates for high-emission vehicles. For those purchasing a new car that emits over 255g/km of CO2, the initial tax bill will soar to £5,690—a £200 increase from the previous year.
Nearly 60 popular car models from 24 major manufacturers are expected to be hit by this top-tier rate, including certain high-performance models from Ford, BMW, Audi, and Toyota.
Standard Rates are Rising Across the Board
It isn’t just new car buyers who will feel the pinch. Most drivers with cars registered after April 2017 will see their annual standard rate rise in line with inflation:
- Standard Rate: Increasing from £195 to £200.
- Older Cars (2001-2017): Drivers of older “gas guzzlers” (Band M) will see annual fees jump to £790. Even owners of modest cars in Bands F and G should expect a £10 hike.
- Pre-2001 Cars: Vehicles with engines larger than 1549cc will see their tax rise to £375.
The New Reality for Electric Vehicle (EV) Owners
2026 marks the first full year where electric vehicle owners are fully integrated into the VED system. While the “free ride” has ended, there are still incentives to stay electric:
- First-Year Rate: New EVs will pay a token £10 in their first year.
- Standard Rate: From the second year onwards, EVs will move to the standard £200 rate.
- Luxury Tax Relief: In a major win for the EV market, the “Expensive Car Supplement” (luxury tax) threshold for electric cars is rising from £40,000 to £50,000. This means many premium EVs will now avoid the £425 annual surcharge that petrol and diesel cars over £40k must pay.
UK Car Tax 2026: Key Rate Changes
| Vehicle Category | Current Rate (2025) | New Rate (April 2026) |
| Standard Annual Rate (Post-2017) | £195 | £200 |
| Highest First-Year Rate (>255g/km) | £5,490 | £5,690 |
| Electric Car (First Year) | £10 | £10 (Frozen) |
| Luxury Tax Threshold (EVs) | £40,000 | £50,000 |
| Luxury Tax Threshold (Petrol/Diesel) | £40,000 | £40,000 (No change) |
Why the Sharp Increase?
The Treasury has been candid about its goals: the 2026 hikes are designed to “strengthen incentives” for the transition to electric. By making high-polluting petrol and diesel cars significantly more expensive to tax in the first year, the government hopes to push the UK closer to its Net Zero targets.
However, motoring groups have warned that these “sharp hikes” could hit rural drivers and those with larger families the hardest, as they often rely on the very vehicles seeing the biggest price jumps.
Important Note: You can check your car’s specific tax band by looking at your V5C logbook or by using the official GOV.UK “Check if a vehicle is taxed” service.
