Car tax changes coming in April 2026: here’s what it means for you
Car changing is a big deal
From higher annual road tax bills to new rules for electric vehicles and company car drivers, here’s everything you need to know about the car tax changes taking effect in April – and how to prepare.
Millions of motorists will face tax changes in April 2026. While none of the updates are dramatic on their own, they could affect household budgets, car-buying decisions, and company car schemes. Here’s a full breakdown of what’s coming into effect.
Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.
Standard road tax increasing to £200
From 1 April 2026, standard rates of Vehicle Excise Duty (VED) will rise in line with Retail Price Index (RPI) inflation. That means that if your car was first registered after April 2017, the flat standard rate will increase from £195 to £200 per year.
This applies regardless of whether the vehicle is petrol, diesel, hybrid or electric (once in the standard-rate period). The rise will show on your next renewal after 1 April.
But why does this matter? A £5 rise may seem small, but with insurance, fuel, and servicing costs also increasing, even modest changes add up. Stay ahead by reviewing insurance and maintenance plans, driving efficiently, and comparing tax rates before buying a new car.
EV buyers: luxury tax threshold moves to £50,000
There is better news for some electric car buyers as the threshold for the “Expensive Car Supplement” – often referred to as the luxury car tax – will rise from £40,000 to £50,000.
Currently, cars with a list price above £40,000 pay an additional £425 per year for five years on top of the standard rate. From April 2026, zero-emission vehicles priced below £50,000 will not pay this supplement.
Many family-sized electric cars fall in the £40,000-50,000 range, which means you could save thousands of pounds in extra road tax over five years. Remember that it’s the official list price (RRP) – not the price you negotiate or a discounted deal – that counts, so double-check before you buy.
Electric company cars: BiK rate rising to 4%
From 6 April 2026, the Benefit-in-Kind (BiK) rate for electric company cars will increase from 3% to 4%.
BiK determines how much tax employees pay on a company vehicle they use privately. Although EVs remain significantly cheaper to tax than petrol or diesel alternatives, this change will slightly increase monthly deductions.
For example, If you drive an electric company car and pay basic-rate tax, your annual tax bill will go up depending on the car’s official list price (P11D value). The higher the price, the bigger the increase.
Planning to renew a lease or use a salary sacrifice scheme in 2026? Ask your payroll or HR team or fleet provider for an updated tax calculation so you know exactly what you’ll pay.
Rest assured, these changes don’t overhaul the car tax system, but they do push costs up slightly while adjusting incentives for electric cars. Planning ahead can help you avoid surprises when the new rates take effect in April 2026.
Car change? Carwow!
Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.
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