Road tax in the UK is undergoing its most significant overhaul in a decade, with electric vehicles (EVs) losing their tax-exempt status starting April 1, 2025, and new luxury car thresholds arriving in April 2026. Under these updated rules, all zero-emission cars registered after April 2017 will move to a standard annual rate of £195, while new EVs will pay a symbolic £10 first-year “showroom tax.” Furthermore, the “Expensive Car Supplement” threshold for electric vehicles is set to increase from £40,000 to £50,000 in April 2026, offering some relief to mid-range EV buyers.
This guide provides an exhaustive breakdown of the new Vehicle Excise Duty (VED) bands, the introduction of pay-per-mile proposals for 2028, and how the 2026 Budget impacts your wallet. Whether you drive a petrol, diesel, hybrid, or fully electric vehicle, understanding these shifting price points is essential for managing your long-term motoring costs.
UK Road Tax Changes 2025-2026
Starting April 1, 2025, the UK government has officially ended the road tax exemption for electric vehicles to ensure all motorists contribute to highway maintenance. This means that even zero-emission cars now fall under the Vehicle Excise Duty (VED) regime, with rates varying based on the vehicle’s age and original list price.
For most modern car owners, this shift results in a flat annual fee that aligns electric cars with petrol and diesel counterparts. While the first-year rate for new EVs remains low at just £10, the subsequent years will see costs jump to the standard rate, which is currently pegged at £195 but expected to rise with inflation.
Electric Vehicle Tax Rates 2025
New electric vehicles registered on or after April 1, 2025, will pay a first-year VED rate of £10, followed by the standard annual rate of £195 from the second year onwards. This “showroom tax” is significantly lower than the rates for high-emission combustion engines, which can reach up to £5,490 in the first year.
Owners of existing EVs registered between 2017 and 2025 will also see their tax bills rise from £0 to £195 annually. Those with older electric models registered before April 2017 are slightly better off, moving into a legacy band that costs approximately £20 per year.
Luxury Car Tax Thresholds 2026
In a major update for the 2026 tax year, the Expensive Car Supplement threshold for electric vehicles will increase from £40,000 to £50,000. This change, effective from April 1, 2026, ensures that buyers of mid-market electric SUVs and saloons are not unfairly penalized by a surcharge designed for luxury vehicles.
For petrol, diesel, and hybrid cars, the threshold remains strictly at £40,000, meaning any vehicle with a list price above this must pay an extra £425 per year for five years. This supplement is added to the standard rate, bringing the total annual tax for premium vehicles to £620.
Petrol and Diesel VED Increases
First-year tax rates for internal combustion engine (ICE) vehicles have doubled for most emission bands as of the 2025/26 financial year. Highly polluting vehicles emitting over 255g/km of CO2 now face a staggering £5,490 bill for their first 12 months on the road.
Even low-emission petrol and diesel cars have seen hikes, with those in the 1-50g/km band jumping from £10 to £110. The government’s strategy is to widen the “tax gap” between zero-emission vehicles and traditional engines to further incentivize the transition to green energy.
Hybrid Car Road Tax News
The £10 annual tax discount previously enjoyed by owners of “alternative fuel” vehicles, including hybrids and plug-in hybrids (PHEVs), has been abolished. Hybrids registered after April 2017 now pay the same £195 standard rate as standard petrol and diesel cars.
In the first year of registration, PHEVs emitting between 1-50g/km will pay £110, while those emitting 51-75g/km will pay £130. These changes reflect a hardening government stance on any vehicle that still relies on a combustion engine for part of its propulsion.
Van and Light Goods Vehicle Tax
Electric vans have also lost their exemption and are now charged at the same rate as petrol and diesel light goods vehicles (LGVs). For the 2025/2026 period, the standard rate for most vans is £345 per year, representing a significant new overhead for small businesses.
This move has been met with criticism from trade bodies, who argue that taxing electric commercial vehicles removes a primary incentive for fleets to decarbonize. However, the government maintains that the revenue is vital for infrastructure that supports all heavy road users.
Pay-Per-Mile Tax Proposals 2028
The government has begun consultations on a “distance-based levy” for electric and hybrid vehicles, which is proposed to begin in April 2028. Under current projections, EV drivers would pay 3p per mile, while hybrid drivers would be charged 1.5p per mile.
This system is designed to replace lost Fuel Duty revenue as the UK moves toward the 2035 ban on new petrol and diesel car sales. While still years away, this proposal suggests that the era of low-cost EV motoring is being phased out in favor of a “user-pays” model.
Historic and Classic Car Exemptions
Classic cars manufactured more than 40 years ago remain entirely exempt from Vehicle Excise Duty, provided they are not used for commercial purposes. As of 2026, vehicles built before January 1, 1986, qualify for the “historic vehicle” tax class.
Owners must still apply for the exemption through the DVLA and must ensure their vehicle has a valid MOT or is legally MOT-exempt. This rolling 40-year rule continues to be a popular incentive for the preservation of automotive heritage in the UK.
Disability Road Tax Exemptions
Motorists who receive certain disability benefits, such as the higher rate of the mobility component of Personal Independence Payment (PIP), remain eligible for free road tax. This exemption applies to one vehicle used by or for the disabled person, regardless of the vehicle’s fuel type.
Even with the new EV tax rules, disabled drivers can still claim 100% relief on their VED. It is important to note that the exemption must be renewed annually, even if the cost is £0, to keep the vehicle’s status legal on the DVLA database.
Regional Road Charges and ULEZ
Beyond national road tax, drivers in 2026 must also navigate evolving regional charges like London’s Ultra Low Emission Zone (ULEZ) and Clean Air Zones (CAZ). While EVs were previously exempt from many of these, London’s “Cleaner Vehicle Discount” for the Congestion Charge expired in late 2025.
Drivers entering central London now face the standard daily charge regardless of their vehicle’s emissions. Other cities, including Manchester, Birmingham, and Bristol, are also reviewing their local levy structures to manage congestion alongside emission targets.
Practical Information and Planning
Navigating road tax requirements requires staying updated with the DVLA’s digital services. Most transactions can now be completed online in under five minutes.
- Payment Methods: You can pay annually, every six months, or via monthly Direct Debit. Note that paying monthly or every six months usually incurs a 5% surcharge.
- Checking Your Status: Use the official GOV.UK “Check if a vehicle is taxed” tool to verify your renewal date and current rate.
- Standard Rates: As of 2026, the standard rate for most cars registered after 2017 is £195/year.
- Luxury Supplement: If your car (excluding certain EVs from April 2026) cost over £40,000 new, add £425 to your annual bill.
- SORN: If you are not using your vehicle, you must register a Statutory Off Road Notification (SORN) to avoid automatic fines.
Seasonal Driving and Tax Renewals
Many drivers choose to SORN their vehicles during winter months, particularly classic car owners or motorcyclists. If you take your vehicle off the road, you can claim a refund for any full months of remaining tax. When returning the vehicle to the road in spring, ensure you re-tax it before driving, as the “grace period” for driving to an MOT station only applies to pre-booked appointments.
Frequently Asked Questions
How much is road tax for an electric car in 2026? For most EVs registered between 2017 and 2025, the rate is £195 per year. New EVs registered after April 2025 pay £10 in their first year and £195 thereafter.
When do electric cars start paying road tax? The new rules came into effect on April 1, 2025. Any EV owner renewing their tax after this date will be required to pay the new rates.
What is the luxury car tax threshold for 2026? For petrol and diesel cars, the threshold is £40,000. For electric vehicles, the threshold increases to £50,000 starting April 1, 2026.
How much is the Expensive Car Supplement? The supplement adds an additional £425 per year to your standard road tax bill for a duration of five years (from year two to year six).
Do I still need to “tax” my car if it’s exempt? Yes, even if your vehicle is exempt (like a classic car or for a disabled driver), you must still complete the renewal process with the DVLA every year.
What happens if I don’t pay my road tax? The DVLA uses automated cameras and records to issue late-payment fines starting at £80. If unpaid, your vehicle can be clamped or impounded.
Can I get a refund if I sell my car? Yes, when you notify the DVLA that you have sold your car, they will automatically issue a refund for any full months of tax remaining.
Is road tax based on engine size or CO2? For cars registered after April 2017, it is a flat rate based on fuel type. For cars registered between 2001 and 2017, it is based on CO2 emissions. For cars before 2001, it is based on engine size.
Do hybrid cars still get a discount? No, the £10 alternative fuel discount was removed in April 2025. Hybrids now pay the standard £195 rate.
What is the pay-per-mile tax coming in 2028? It is a proposed levy of 3p per mile for EVs and 1.5p for hybrids to replace lost fuel duty revenue, though it is currently in the consultation phase.
Are electric vans exempt from road tax? No, electric vans now pay the standard Light Goods Vehicle rate, which is currently £345 per year.
How do I check my car’s list price for the luxury tax? The list price is the RRP on the day before the vehicle was first registered, including all optional extras and VAT. It is not the price you paid second-hand.
Does road tax transfer to the new owner? No, road tax is no longer transferable. The new owner must tax the vehicle immediately before driving it away, and the seller receives a refund.
Is there a discount for paying road tax annually? Yes, paying for 12 months in a single lump sum is cheaper than paying via monthly Direct Debit or in two six-month installments, which both carry a 5% surcharge.
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