Plate Inflation: April’s VED Hike Pushes Some Drivers’ Road Tax Past £790 A Year

The April 2026 Vehicle Excise Duty changes are now fully in force, and drivers buying or renewing tax on a new car this spring are running into the biggest set of road tax increases in years. First year rates for higher emission models have climbed sharply, electric vehicles have lost their full exemption and now pay £10 in year one and the £200 standard rate from year two, and the Expensive Car Supplement still adds £425 to the bill on cars costing more than £40,000. For owners of plug in hybrids and large SUVs the combined effect can push the annual road tax bill into the high hundreds, with some configurations crossing £790 a year over the first five years of ownership.

If you are buying a new car in the next few weeks or you have just received a tax renewal letter on an existing vehicle, the numbers matter. The headline figures are straightforward but the way they interact with the Expensive Car Supplement and the new electric vehicle rules is where most drivers are getting caught out.

The New First Year Rates

First year Vehicle Excise Duty, often called the “showroom tax”, is the one paid by the buyer of any new car. The amount depends entirely on official CO2 emissions, and the bands have all moved upwards from 1 April 2026. The lowest emission petrol and diesel cars, those producing between 1 and 50g of CO2 per kilometre, now pay £10 in year one. Cars in the 51 to 75g band pay £30. The middle bands have all increased.

Where it really stings is the upper end. A new car emitting between 151 and 170g of CO2, common for many mid sized SUVs and performance saloons, now pays £680 in year one. A car emitting 171 to 190g pays £1,095. A car emitting 191 to 225g pays £1,650. The top band, for cars emitting more than 255g per kilometre, pays £5,490 in year one. Those rates are paid as part of the on the road price by the dealer when the car is first registered, but they show up in the bottom line price the customer pays. For buyers of new petrol or hybrid SUVs in particular, the first year tax can add over £1,000 to the cost of the car.

After the first year, the rate drops to the standard annual figure. For cars first registered after 1 April 2017, the standard rate has risen from £195 to £200 from April 2026. That £5 increase looks modest, but it applies to every year of ownership and to almost every car on the road. It is also subject to the Expensive Car Supplement.

The Expensive Car Supplement Trap

The Expensive Car Supplement, often called the £40k surcharge, adds an extra £425 a year on top of the standard rate for any car with a list price above £40,000 when new. The supplement applies for five years starting from the second year of ownership. So a £42,000 petrol SUV pays the showroom tax in year one, then £200 plus £425 for each of years two to six, a total of £625 a year for those five years. Across the first six years that adds up to £3,125 plus the first year tax.

The Expensive Car Supplement is the rule that catches out the most buyers. The £40,000 threshold is based on the manufacturer’s list price including any factory options and any first registration fee, not the actual price you paid after a discount. A discounted £39,500 car you bought for £36,000 still counts as a £39,500 car for VED purposes and falls below the threshold. A discounted £42,000 car you bought for £37,000 counts as £42,000 and triggers the supplement. The price that matters is the official list price published in the dealer’s price sheet at the date of first registration.

For electric vehicles there is now a small piece of good news. The Expensive Car Supplement threshold for new zero emission cars rose from £40,000 to £50,000 from April 2026, recognising that many family sized EVs naturally fall in the £40,000 to £50,000 range because of battery costs. A £48,000 electric SUV registered after 1 April 2026 will pay £10 in year one and £200 a year from year two, with no supplement, saving £2,125 across the first six years compared with a petrol equivalent at the same price.

The threshold for petrol, diesel and hybrid cars remains at £40,000. The decision not to raise it for non zero emission vehicles means that an increasing number of mainstream mid sized SUVs and family saloons now fall into supplement territory, simply because list prices have climbed with general car price inflation. A typical large family SUV today often crosses the £40,000 mark in mid spec trim, even before options.

Electric Vehicles Have Lost Their Exemption

The headline change for electric car owners is the end of the road tax exemption. New zero emission cars first registered from 1 April 2026 pay £10 in year one. Then from year two they pay the standard £200 rate alongside every other car. Electric cars registered between 1 April 2017 and 30 March 2026 also moved on to the standard £200 rate from April 2026. Even older zero emission cars first registered between 1 March 2001 and 31 March 2017 were moved into the £20 a year tax band.

The change brings electric vehicles into the same tax regime as petrol, diesel and hybrid cars. The expensive Car Supplement also now applies to EVs costing more than £50,000, although as noted the threshold is higher than for combustion cars.

The decision to end EV exemption was announced in the Autumn Budget 2024 and confirmed in subsequent fiscal events. The official rationale is that with around one in four new cars now electric, exempting them from VED has become unaffordable for the Treasury. Critics argue ending the exemption removes one of the financial incentives to switch.

There is also a pay per mile system coming. From April 2028, drivers of new electric and plug in hybrid cars will pay an additional Electric Vehicle Excise Duty (eVED) charged at 3p per mile for fully electric cars and 1.5p per mile for plug in hybrids. That charge will be in addition to the standard VED rate, and it has not yet been finalised in detail, but the principle of taxing electric driving by distance has been confirmed.

How To Work Out What Your Car Will Cost

For any new car bought from April 2026 onwards, your VED is calculated in four steps. First the first year showroom tax based on official CO2 emissions, paid by the dealer at registration. Second the standard annual rate of £200 from year two onwards (£10 for zero emission cars). Third the Expensive Car Supplement of £425 a year for years two to six if the list price exceeds £40,000 for combustion cars or £50,000 for zero emission cars. Fourth any rule changes that take effect during your ownership, such as the eVED pay per mile system from 2028.

The VED rates apply only to cars first registered on or after 1 April 2017 under the current banded system. Cars registered between 1 March 2001 and 31 March 2017 sit on a different banding system that uses the same CO2 figures but different annual rates. Cars registered before 1 March 2001 are taxed only by engine size, with £210 a year for engines above 1549cc and £140 a year for smaller engines.

For company car drivers, Benefit in Kind tax is a separate calculation and is rising. The BiK rate for electric company cars increased from 3 per cent to 4 per cent on 6 April 2026, the first of a series of annual one per cent increases set to take it to 9 per cent by 2030. That rise narrows the tax advantage of an electric company car compared with a petrol or hybrid, although electric still remains the cheapest BiK option for higher rate taxpayers in most cases.

What To Do If You Are About To Buy A Car

Three practical points are worth checking before you sign a finance agreement. The first is the manufacturer’s list price. If the headline price of the car you are looking at is anywhere near £40,000 for a combustion model or £50,000 for an EV, ask the dealer for the exact list price including any factory options. Items like metallic paint, panoramic roofs and larger wheels can push a car over the threshold and add £2,125 to your total tax bill over five years.

The second is the first year CO2 figure. The dealer can show you the official Worldwide Harmonised Light Vehicle Test Procedure CO2 number on the vehicle data sheet. Cars in the same model range but with different engines or option packs can sit in different VED bands. Choosing the lower band can save several hundred pounds in year one.

The third is whether the model qualifies as a zero emission vehicle for VED purposes. Plug in hybrids that produce some CO2 are not zero emission and pay petrol style tax. Only fully battery electric and hydrogen fuel cell cars qualify for the £10 first year rate and the higher £50,000 supplement threshold.

For drivers of existing cars, your renewal is simpler. Look at the V11 reminder letter the DVLA sends you, which shows the exact figure for your renewal. If you do not have the V11, you can check your tax cost online at gov.uk by entering your registration. Make sure the tax is renewed before the expiry date because driving an untaxed car attracts an automatic £80 late licensing penalty plus the risk of police seizure under ANPR powers.

The Bigger Picture For 2026 And Beyond

April’s changes are part of a longer trajectory. Standard rates will continue to rise broadly in line with the Retail Price Index each year. The Expensive Car Supplement is likely to remain at £40,000 for combustion cars while inflation gradually pushes more models into supplement territory. The eVED pay per mile system arrives from April 2028. The BiK rate for electric company cars continues to climb. And the Government has signalled it intends to review the whole motoring tax structure as petrol and diesel sales decline towards the 2030 phase out of new non zero emission vehicles.

For now the practical message is that road tax is no longer the bargain it once was, particularly for buyers of new mid range and premium cars where first year rates and the Expensive Car Supplement can combine to add £3,000 or more to the cost of ownership over the first six years. Working out the numbers before you sign for a car is the only way to avoid the kind of surprise that lands on a renewal letter twelve months later.

Sources:

• Car tax bands 2026: VED road tax costs explained, RAC Drive
• April 2026 UK Car Tax Changes Explained, Carwow
• Vehicle excise duty and zero emission vehicles, House of Commons Library
• UK road tax 2026: New VED rates see drivers paying up to £790 a year, Regit
• Car Tax Rises 2026 UK: VED Changes & List of Affected Cars, Bumper
• April 2026 car tax changes explained, Regit