What drivers must know about car tax changes 2026
Introduction — why car tax changes 2026 matter
Car tax changes 2026 are important for motorists, fleets and businesses because they alter the cost calculus for buying, running and assigning vehicles. Recent measures announced for 2025–26 in the UK and tax adjustments set to take effect in 2026 elsewhere mean zero-emission incentives are being scaled back while some fuel taxes rise. Understanding these changes helps drivers and fleet managers avoid unexpected bills and plan vehicle purchases.
Main details — what the announced changes say
United Kingdom: VED and company car tax updates
UK measures announced in the Autumn Budget and explained by MTA (My Tax Accountant) affect Vehicle Excise Duty (VED) and Benefit-in-Kind (BIK) rules for 2025–26 and into 2026. From 1 April 2025 new electric vehicles (EVs) lose full VED exemption: they will pay a £10 first-year VED, then the standard annual VED of £195 (uprated by RPI). Luxury EVs priced over £40,000 may be liable for the Expensive Car Supplement for years two to six, adding several hundred pounds annually and in some cases bringing total annual tax to around £620.
For petrol, diesel and higher-emission cars, first-year VED rates have risen substantially in many bands, with the highest-emission models facing large one-off first-year charges (reported up to £5,490). Lower-emission bands have also increased — for example, 1–50g/km bands (often plug-in hybrids) rise to about £110, and 51–75g/km to £130–£135. Company car BIK rates for EVs increase slightly but remain lower than for petrol or diesel alternatives. Double-cab pick-ups are increasingly treated as cars for tax purposes, and hybrid discounts have been removed. The government has kept a fuel duty freeze with an extended 5p cut to offer some relief.
Other jurisdictions and fuel tax shifts
Beyond the UK, tax bodies are also altering fuel taxation for 2026. The Tax Foundation notes that from 1 January 2026 a fuel tax increase from 40 cents to 46 cents will take effect in some jurisdictions and diesel will become subject to the motor vehicle fuel tax. Separately, commentators note that many governments are moving away from zero road tax for EVs in 2026.
Conclusion — implications and what readers should do
These car tax changes 2026 signal a shift from blanket incentives for EV uptake towards fiscal adjustments that recoup revenue and target high-value vehicles. Drivers, company car users and fleet operators should review purchase plans, total cost of ownership and BIK exposure. Given variations by vehicle price, CO2 band and jurisdiction, seeking tailored advice from a qualified tax advisor or accountant is recommended to avoid unexpected costs and optimise vehicle choices.
