Overview
- The Treasury uprated CO2-based first-year Vehicle Excise Duty rates in line with inflation, with the new schedule taking effect from 1 April 2026 and applying to newly registered cars.
- The highest first-year VED band for cars emitting over 255g/km of CO2 now stands at £5,690, and multiple intermediate CO2 bands were increased by modest amounts.
- New electric cars with a list price under £50,000 pay a £10 first-year charge but move to the £200 standard annual rate thereafter and may face an expensive-car supplement if their list price exceeds the EV threshold.
- Vehicles with an original list price above £40,000 for petrol and diesel and above £50,000 for electric models face an expensive-car supplement that adds several hundred pounds to annual VED for a defined multi-year period.
- HM Revenue & Customs introduced revised VAT road-fuel scale charges from 1 May 2026 that businesses must use from their next accounting period, with 12-month rates ranging roughly from £657 for low-emission cars up to about £2,297 for the highest CO2 bands, affecting how firms reclaim VAT on private fuel use.