Road Tax Is Up, EVs Are No Longer Free And A New Per Mile Charge Is Coming…

Another April, another rise in Vehicle Excise Duty. From 1 April 2026, the standard annual rate of VED has increased by £5, from £195 to £200. It is not a dramatic jump on its own, but it comes on top of a string of annual increases that have quietly pushed the cost of keeping a car on the road higher and higher. And for electric vehicle owners, this year marks something far more significant than a fiver.

The days of zero road tax for EVs are officially over. Electric cars were brought into the VED system for the first time in April 2025, paying a token £10 first-year rate. Those early adopters are now rolling into their second year and facing the full £200 standard rate for the first time. New EV buyers registering from April 2026 will pay the same £10 in year one, then £200 every year after that. The tax-free era that helped sell the switch to electric has gone, and it is not coming back.

What Every Driver Pays From April 2026

For petrol, diesel and hybrid cars registered after 1 April 2017, the picture is straightforward. The standard annual rate is now £200. If you pay every six months, it costs £110, or £105 on direct debit. Monthly payments via direct debit come to £210 across the year.

First-year rates for new cars are based on CO2 emissions and vary widely. The cleanest petrol and diesel cars pay as little as £10 in year one, while the dirtiest (over 255g/km CO2) now face a first-year bill of £5,690, up £200 from last year.

For electric vehicles, the first-year rate is £10 regardless of the car, followed by the standard £200 annually from year two.

Cars registered between 1 March 2001 and 31 March 2017 remain on the older banding system, where rates depend on the car’s CO2 emissions band. These have also risen in line with the Retail Price Index.

The Expensive Car Supplement

Any new car with a list price above £40,000 attracts the Expensive Car Supplement, which adds £440 per year on top of the standard rate for the first five years that the standard rate applies. That takes the total annual VED bill to £640.

There is one piece of relatively good news for EV buyers here. From 1 April 2026, the threshold for zero-emission vehicles has been raised from £40,000 to £50,000. The change also applies retrospectively to electric cars registered from 1 April 2025 onwards. Given that the Society of Motor Manufacturers and Traders estimates over 70% of new EV models are listed above £40,000, this is a meaningful shift. Many electric cars that would have triggered the supplement under the old threshold are now exempt.

Petrol, diesel and hybrid cars keep the £40,000 threshold. If you are buying a new combustion-engined car priced above that figure, you will pay £640 per year for the first five years at the standard rate, then drop back to £200.

The Per Mile Charge Coming In 2028

While VED covers the here and now, a bigger change is on the horizon. From April 2028, the government plans to introduce Electric Vehicle Excise Duty, or eVED, a distance-based charge designed to replace the fuel duty revenue that the Treasury loses as more drivers switch away from petrol and diesel.

The proposed rates are 3 pence per mile for fully electric vehicles and 1.5 pence per mile for plug-in hybrids. For an average EV driver covering 8,500 miles per year, that works out at roughly £255 annually on top of VED.

The system will work through estimated mileage declared at VED renewal, with reconciliation against actual mileage recorded at MOT tests. For cars under three years old and not yet due an MOT, drivers will self-report their mileage.

EV owners will pay both VED and eVED from 2028, meaning a typical annual bill of £200 in road tax plus roughly £255 in mileage charges, totalling around £455 before the expensive car supplement is even considered.

Company Car Drivers And Benefit In Kind

For anyone running an electric company car, the Benefit in Kind rate for 2026/27 has risen to 4%, up from 3% in the previous year. It will climb to 5% in 2027/28, then increase by 2% annually until it caps at 9% in 2029/30.

Even at 9%, the BiK rate for electric cars will sit well below the maximum 37% rate for the highest-emission petrol and diesel models, which means salary sacrifice schemes for EVs remain one of the most tax-efficient ways to run a car. But the direction of travel is clear: the incentives are shrinking year on year.

Disabled Drivers And VED Exemptions

Drivers who receive the higher rate mobility component of Disability Living Allowance, the enhanced rate mobility component of Personal Independence Payment, the War Pensioners’ Mobility Supplement, or the Armed Forces Independence Payment are still entitled to a full VED exemption. Vehicles used by organisations providing transport for disabled people may also qualify.

If you receive PIP or DLA and are not currently claiming the exemption, it is worth checking your eligibility through the Blue Badge scheme guide, which covers the broader range of support available to disabled drivers.

Historic Vehicles

Cars built on or before 31 December 1985 now qualify for the rolling 40-year VED exemption, meaning they pay nothing. From April 2027, the exemption will extend to vehicles built in 1986.

The exemption is not automatic. Owners need to register their vehicle with the DVLA to claim the £0 rate, and the car must not have been substantially modified to its chassis, bodywork or engine in the past 30 years.

The Bigger Picture

None of these individual increases look particularly painful in isolation. A £5 rise here, a 1% BiK adjustment there. But taken together, the cost of keeping a car on the road in the UK continues to climb, and the gap between owning an EV and owning a petrol or diesel car is narrowing fast.

The introduction of eVED in 2028 will close that gap even further. For drivers who switched to electric partly because of the running cost savings, the financial case is getting harder to make with every budget. And for those still running petrol or diesel, the annual VED bill is now £200 and almost certainly heading in only one direction.

Sources:

• GOV.UK, VED rates April 2026 (PDF)
• RAC, car tax bands 2026 explained
• Honest John, April VED tax increases 2026 rates explained
• GOV.UK, consultation on the introduction of eVED
• House of Commons Library, electric vehicle excise duty
• GOV.UK, vehicle tax for electric and low emission vehicles
• GOV.UK, historic vehicles eligibility