Major Car Tax Increase to Impact 59 Vehicle Models
Drivers across the UK are being urged to check their vehicle logbooks as a significant tax hike looms for 59 car models from 24 manufacturers, including prominent brands like Ford, BMW, and Mercedes. From April 1, 2026, these vehicles will face a first-year Vehicle Excise Duty (VED) charge of £5,690, marking a substantial increase under new government regulations aimed at encouraging a shift to electric vehicles.
Details of the VED Changes
The tax adjustments stem from sweeping reforms introduced last year, which initially saw certain models hit with a £2,745 rise. The government has opted to significantly raise first-year VED charges for petrol and diesel vehicles starting April 2025, with further escalations planned. These charges are paid by buyers of brand-new cars before reverting to a standard rate in subsequent years.
The increases follow a tiered structure based on carbon dioxide emissions, with the highest bands—vehicles emitting over 255 g/km of CO2—bearing the brunt of the changes. First-year charges have already climbed to £5,490 and are set to rise to £5,690 by April 2026. Major manufacturers such as Ford and Toyota will see specific models affected, while luxury brands like Porsche, Lotus, Lamborghini, and McLaren are among those facing the steepest charges.
Government Rationale and Broader Implications
Chancellor Rachel Reeves announced these measures in her Budget address, stating that the goal is to strengthen incentives for purchasing electric vehicles by widening the differentials in VED first-year rates between EVs and hybrid or internal combustion engine cars. The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero-emission cars and EV charge points for an additional year.
Budget documents outline that VED first-year rates, paid at the point of vehicle registration, vary based on emissions. From April 1, 2025, these rates will be adjusted to widen the gap between zero-emission, hybrid, and internal combustion engine cars. Projected rates for April 2026 show increases across all emission bands, with the highest band (over 255g/km) rising from £5,490 to £5,690.
Additional Tax Measures and Future Changes
Beyond the first-year VED charges, vehicles with a purchase price exceeding £40,000 face a luxury car tax surcharge. This adds an extra £425 annually from the second to the sixth year of ownership, totaling £2,125 over five years. From April 2026, the threshold for this surcharge will increase to £50,000 for electric vehicles, while petrol and diesel cars remain at the £40,000 limit.
Looking ahead, electric vehicles will encounter a new 'mileage tax' starting April 2028, set at 3p per mile for battery electric cars and £0.015p per mile for plug-in hybrids. This measure aims to address revenue gaps from EVs not paying fuel duty, with funds directed toward road maintenance. The rate will adjust annually in line with the Consumer Price Index, potentially adding around £300 for every 10,000 miles traveled.
Exemptions and Industry Concerns
Certain exemptions remain in place, including the 40-year classic car tax rule, which exempts vehicles manufactured over four decades ago from VED payments. Road tax exemptions for disabled motorists also continue unchanged. However, industry experts express concerns about the financial impact on drivers. John Cassidy, sales managing director at Close Brothers Motor Finance, warned that a pay-by-mile scheme for EVs could increase costs for those with high annual mileage, potentially making EV ownership more expensive than traditional options amid rising energy bills and public charging costs.
As these changes unfold, motorists are advised to stay informed about how their vehicles may be affected, particularly when considering new purchases or assessing current tax liabilities.
