Millions of UK drivers are set to face a series of new motoring taxes from April 2026, following measures confirmed in the Labour government's Autumn Budget. Chancellor Rachel Reeves has outlined a significant shake-up, introducing a pay-per-mile charge for electric vehicles and adjusting duties across several vehicle classes.
Electric Vehicles and the New Pay-Per-Mile Charge
The most notable reform is the introduction of Electric Vehicle Excise Duty (eVED), a new road tax system for battery electric and plug-in hybrid vehicles. This pay-per-mile scheme, confirmed to start in April 2028, marks a major shift in how eco-friendly vehicles are taxed as their popularity grows.
In a related move, the Expensive Car Supplement (ECS) threshold will be increased specifically for zero-emission cars. From 1 April 2026, only zero-emission cars with a list price exceeding £50,000 will pay the charge, up from the current £40,000 threshold which remains for all other vehicles. This change applies retrospectively for many vehicles registered from 1 April 2025.
VED Increases and Company Car Tax Reforms
From 1 April 2026, the government will uprate standard Vehicle Excise Duty (VED) rates for cars, vans, and motorcycles in line with the Retail Price Index (RPI). This annual adjustment will directly impact the cost of taxing these vehicles for the 2026-2027 financial year.
Significant changes are also coming for company car schemes. The Chancellor confirmed that Employee Car Ownership Schemes (ECOS) will be brought into the scope of Benefit-in-Kind (BiK) tax rules. To allow the sector time to adapt, implementation is delayed until 6 April 2030, with transitional arrangements lasting until April 2032.
A temporary tax easement for Plug-in Hybrid Electric Vehicles (PHEVs) used privately will also be introduced. This measure, effective retrospectively from 1 January 2025 until 5 April 2028, will use a nominal CO2 value to reduce the BiK tax liability for affected vehicles facing new emissions standards.
Impact on Commercial Vehicles: Vans and HGVs
The tax changes extend heavily to commercial road users. The VED for Heavy Goods Vehicles (HGVs) will also be uprated in line with RPI from 1 April 2026.
Furthermore, the separate HGV levy—a charge for using UK roads—will be increased in line with RPI for the same period, also taking effect from 1 April 2026. These adjustments will increase operational costs for haulage and logistics companies.
These five key changes, stemming from the Autumn Budget 2025, represent the most substantial overhaul of motoring taxation in recent years. Drivers and businesses alike are advised to review their vehicle strategies and budgets to prepare for the increased costs coming into force in April 2026.
