Swansway Motor Group, a provider of new and used cars in the UK, has highlighted the arrival of new car tax changes that will officially come into effect from April 2026. These changes will bring new Vehicle Excise Duty (VED) rates that will affect millions of drivers across the UK.
Understanding that these updates are crucial for motorists looking to manage and understand the true costs of car ownership, Swansway Motor Group has outlined many of these changes, some of which might appear minor at first, but signal a great shift in how vehicles are taxed, especially as electric cars become more widespread.
Standard Road Tax Has Increased
The standard annual VED rate has risen from £195 to £200 for all vehicles registered after April 2017. Although this increase is relatively small, it’s still important to consider it amongst the growing list of motoring expenses, alongside rising costs for fuel, insurance, and maintenance.
Electric Cars Now Taxed Differently
A major change is that electric cars are no longer exempt from road tax. They now fall under the standard VED system:
- £10 first year tax for new EVs
- £200 annual rate thereafter
This marks a move towards a more balanced system across all fuel types. Despite this, electric cars can still offer savings in other areas, making them a strong long term option.
Luxury Car Tax Changes For EVs
The Expensive Car Supplement threshold for EVs has increased from £40,000 to £50,000. This means:
- EVs under £50,000 avoid the extra charge
- EVs above this pay an additional £440 per year for five years
This change makes more electric vehicles accessible, particularly in the mid range market.
Company Car Tax Is Rising
The Benefit in Kind (BiK) rate for electric vehicles has increased from 3% to 4%. While still lower than petrol and diesel, company car drivers will see slightly higher monthly costs.
First Year Tax Still Emissions-based
First year VED remains linked to CO2 emissions, with higher emission cars facing the highest upfront costs. This continues to encourage lower emission choices.
What It Means For Drivers
These 2026 updates highlight a few key trends shaping the future of motoring in the UK. Road tax is gradually increasing, while electric vehicles are now fully integrated into the tax system, and vehicle price is playing an even greater role in long-term ownership costs.
Swansway Motor Group urges drivers to evaluate the total cost of ownership, including tax, fuel, insurance, and depreciation, when choosing their next vehicle.
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