Vehicle Excise Duty — car tax — has changed significantly in 2026, most notably with electric vehicles now subject to VED for the first time. Here’s a clear guide to what you pay, how it’s calculated, and how to check and pay yours.
The Big Change: EVs Now Pay VED
From April 2025, electric vehicles lost their VED exemption and became subject to road tax for the first time. This has been phased in, but from April 2026 the full rates apply. Zero-emission cars registered on or after 1 April 2017 pay the standard annual rate — currently £195 per year. Zero-emission cars registered before that date pay a lower rate.
The change has generated significant discussion among EV owners who factored the exemption into their ownership costs. The practical reality is that even at full rates, VED represents a modest part of overall running costs for most drivers — but it’s no longer zero.
How VED Is Calculated for Petrol and Diesel Cars
For cars registered on or after 1 April 2017, VED is calculated in two stages.
The first year rate is based on CO2 emissions and is paid when the car is first registered. For high-emission vehicles this can be substantial — cars emitting over 255g/km CO2 attract a first-year rate of £2,745. Lower-emission vehicles pay considerably less.
From the second year onwards, most cars pay the standard rate — currently £195 per year. However, cars with a list price over £40,000 when new attract an additional £620 per year supplement for years two through six of their life, regardless of fuel type. This applies even to electric cars above that price threshold.
For cars registered between 2001 and 2017, rates are banded by CO2 emissions. For cars registered before 2001, rates are based on engine size.
Current Standard Rates (2026)
The standard annual VED rate for most cars (registered after April 2017) is £195. Paying by direct debit adds a small surcharge — annual by direct debit costs slightly more than a single annual payment. Six-monthly payment also carries a surcharge.
Alternative fuel vehicles (hybrids registered before April 2025) historically received a £10 discount on the standard rate, though the government has been gradually removing this advantage.
The Fuel Duty Change
Separately from VED, the 5p per litre fuel duty discount introduced in 2022 in response to the cost-of-living crisis is due to end in September 2026. This means petrol and diesel prices are expected to rise by around 5p per litre from that point, adding approximately £3–£4 to a typical fill-up for a family car.
How to Check When Your Car Tax Is Due
The DVLA’s online vehicle enquiry service at gov.uk lets you check the tax status of any vehicle using its registration number. It shows whether the vehicle is taxed, when the tax expires, and whether it has a valid MOT. The service is free and takes seconds.
You’ll also receive a reminder letter from the DVLA approximately a month before your tax expires.
How to Pay Car Tax
You can renew car tax online at gov.uk using your V5C reference number or the DVLA reminder letter reference. Payment options include a single annual payment, a six-monthly payment (with a small surcharge), or monthly by direct debit (also with a surcharge). You can also pay at a Post Office, though most drivers use the online service.
You need a valid MOT to tax a car that’s more than three years old. If your MOT expires before your tax, you’ll need to renew the MOT first.
What Happens If You Don’t Pay?
The DVLA uses automatic number plate recognition cameras to identify untaxed vehicles. If your car is detected as untaxed on a public road, it can be clamped and impounded. Release fees start at £100, plus any outstanding duty and penalties. Continued failure to pay can result in court action and fines of up to £1,000.
If the car is off the road, you need a SORN — Statutory Off Road Notification — which suspends the tax requirement and results in an automatic refund of any remaining complete months of tax.
Checking Before You Buy
When buying a used car, always check the tax status before completing the purchase. VED no longer transfers with the vehicle — since 2014, tax doesn’t pass from seller to buyer. The seller receives a refund for any remaining complete months, and the new owner must tax the vehicle immediately. Driving an untaxed car — even briefly after purchase — is technically an offence.
Company Car Tax
Company car tax (Benefit in Kind) is calculated separately from VED and has also changed in 2026. The BIK rate for electric company cars has risen from 3% to 4%, and rates for higher-emission vehicles continue to increase year on year. If you have a company car, it’s worth reviewing how the 2026 rates affect your personal tax liability.
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