April 2026 car tax changes explained: what to expect in the UK
Here are the upcoming changes to standard rate Vehicle Excise Duty (VED), first-year road tax rates and the luxury car tax for EVs
)
)
From 1 April 2026, changes to UK road tax will come into play and you’ll need to know what to expect.
The big hitters are the increase to the luxury car tax threshold for electric cars, but there’s also an increase to standard rate road tax, first-year VED rates and Benefit-in-kind (BiK) rates.
Here’s what to expect, and how these changes might impact your finances.
)
Standard rate road tax increases
Standard rate road tax will now be £200
As of 1 April 2026, standard rate road tax will increase from £195 to £200.
If your car was registered after 1 April 2017, your new annual tax rate will be £200 (after you’ve paid the first-year rate based on emissions) – that includes petrol, diesel, hybrid and electric cars.
Luxury car tax threshold increases for EVs
Luxury car tax for electric cars now only applies EVs that cost over £50,000
April will also bring an increase to the ‘Expensive Car Supplement’ threshold that previously sat at a £40,000 cap – but only for electric cars.
Previously, cars that cost over £40,000 brand-new would have to pay an extra £425 per year for five years (from the second to the sixth year the car’s on the road). That’s on top of standard rate car tax.
Now, your electric car will have to cost over £50,000 to be stamped with the luxury car tax. That gives you some extra wiggle room for option for EVs like the Kia EV3 or Polestar 2.
BiK rate rises for EVs
Benefit-in-kind for electric company cars increases to 4%
Benefit-in-kind tax applies to company cars that you can also use privately, with rates based on the car’s emissions.
From 6 April 2026, BiK for electric company cars will increase to 4% (previously 3%).
You can ask your company’s HR team to help you get an updated tax calculation to plan ahead for 2026/27.
First-year road tax rates to increase with inflation
Emissions-based bands to go up, exact amounts to be announced
First-year road tax for new cars is based on bands for the CO2 emissions that car produces.
These emissions-based car tax rates increased significantly in April 2025, and are set to increase again in April 2026, this time in line with inflation.
The official rates are yet to be confirmed.
2026 car tax changes
Road tax is quite complicated – shown by the fact it’s referred to as Vehicle Excise Duty (VED), car tax and road tax interchangeably.
The good news is that electric cars have more leeway before being subject to the luxury car tax (aka ‘Expensive Car Supplement’).
On the other hand, the standard rate, first-year emissions-based rates and benefit-in-kind (BiK) rates will all increase in April 2026.
)