Hundreds of thousands of motorists in the United Kingdom are preparing for a substantial increase in Vehicle Excise Duty (VED) and overall motoring costs from April 2026, prompting concerns among drivers, commuters and travellers alike as transport budgets tighten. A combination of rising car tax rates, higher insurance premiums and new tax policies linked to electric vehicles is reshaping what it costs to own and operate a car across the UK, affecting everyday travel for residents and visitors planning road trips.
Data indicates that, over the past decade, the combined cost of car tax and insurance has increased sharply, placing additional financial pressure on households who rely on personal vehicles for commuting, business travel and tourism activities. As the cost‑of‑living challenge persists, the latest changes to motoring taxation are sparking debate over affordability and the future of transport policy in the UK.
New Car Tax Rules From April 2026: What’s Changing
Vehicle Excise Duty (VED) Uprating
From 1 April 2026, the UK Government will adjust Vehicle Excise Duty rates in line with inflation for cars, vans and motorcycles as outlined in the Autumn Budget 2025 documentation. This means drivers can expect higher annual tax bills based on their vehicle’s emissions band and original list price.
Electric Vehicles Now Pay Road Tax
Electric vehicle owners — who previously benefited from zero car tax in many cases — are now required to pay standard road tax (VED) based on emissions and vehicle value. New zero‑emission cars registered on or after 1 April 2025 pay a first‑year VED (around £10) before moving to a standard rate (around £200 in 2026), with optional expensive car supplements for pricier models.
Upcoming Mileage‑Based EV Tax (eVED)
Looking ahead, the Government has confirmed proposals for a pay‑per‑mile road tax on electric and plug‑in hybrid vehicles, known as Electric Vehicle Excise Duty (eVED), set to take effect from April 2028. Under the consultation framework, EV drivers would pay 3 pence per mile, while plug‑in hybrid vehicle drivers would pay 1.5 pence per mile, reflecting an attempt to align revenue as fuel duty receipts fall with the shift to electric motoring.
Example impact: Driving an EV 10,000 miles a year could cost around £300 under the new scheme, alongside standard VED and insurance costs.
Why Motoring Costs Are Increasing
Tax Adjustments and Inflation
Changes to tax and premium levels reflect broader Government fiscal policy, with annual uprating based on retail price inflation impacting the amount drivers must pay. These adjustments are weighted against the ongoing freeze of personal tax allowances and other cost pressures on households.
Insurance Premium Growth
Insurance costs have also risen, with many drivers paying substantially more than they did a decade ago due to a mix of factors including claims trends and market conditions. Although specific Office for National Statistics (ONS) data on insurance inflation varies, the general upward trend adds to the financial burden of vehicle ownership.
Fuel Duty and Shift to EV Taxation
With traditional fuel duty receipts declining as more drivers adopt electric vehicles, the Government is shifting toward broader taxation models like eVED to ensure all road users contribute to infrastructure funding.
Impact on Daily Commuters and Tourists
For Commuters
- Higher commuting costs: Individuals relying on daily car travel may find their yearly budgets stretched by increasing VED and insurance bills.
- Business travel expense rises: Companies with vehicle fleets could see operational costs increase, potentially influencing pricing for logistics or services.
For Tourists and Road Trip Planners
- Travel budgeting: Visitors planning UK road trips should factor in higher mandatory tax and insurance costs when estimating total travel expenses.
- Electric vehicle choices: Tourists using or renting EVs should consider mileage estimates to avoid unexpected tax charges under future eVED rules.
- Alternative transport: For some, combining rail or coach travel with short‑ride car hire can mitigate rising costs.
Quick Tips for Drivers and Travellers
- Check Your Car Tax Band: Use the official DVLA and gov.uk vehicle tax lookup services to confirm your current VED rate and projected costs.
- Budget for Insurance Early: Compare multiple insurance providers to lock in better deals and reduce premium surprises.
- Plan Road Trips With Costs in Mind: Include VED, insurance and fuel or charging costs in your trip planning to avoid budget drain.
- Consider EV Mileage Needs: If using an EV for travel, estimate your annual miles to anticipate eVED charges from 2028.
- Explore Alternatives: Public transport and regional rail passes may offer savings for long distances or urban travel.
Step‑by‑Step Guide to Understanding Your Motoring Costs
1. Check Your Vehicle Tax Requirements:
Visit gov.uk’s Vehicle Tax section to confirm VED rates and how your car’s emissions and value influence your bill.
2. Understand EV Road Tax:
If you own or plan to buy an EV, factor in current VED rules and anticipate the impact of eVED per‑mile charges starting in 2028.
3. Review Insurance:
Gather quotes from multiple insurers and evaluate no‑claims discounts to minimise premium increases.
4. Forecast Running Costs:
Include maintenance, insurance, tax and fuel (or charging) in your annual travel budget, rather than only upfront purchase costs.
5. Adjust Travel Plans Accordingly:
If costs are high, consider public transport, carpooling or hybrid travel plans to balance experience and expenses.
Key Points in Bullets
- Vehicle Excise Duty (VED) is being updated in April 2026 to reflect inflation and emissions‑based rates.
- Electric vehicles are no longer universally exempt from road tax, with most EVs now liable for standard VED.
- A proposed pay‑per‑mile EV tax system (eVED) will start in April 2028, charging 3p per mile for EVs and 1.5p per mile for hybrids.
- Insurance premiums have risen markedly over the past decade, contributing to higher overall motoring costs.
- Tourists and travellers planning UK road trips should factor these rising costs into their transport budgets.
Final Thoughts
The evolving landscape of car taxation in the UK reflects broader changes in travel and transport policy, with rising Vehicle Excise Duty, insurance premiums and emerging taxes for electric vehicles shaping what it costs to drive. For everyday drivers, business travellers and tourists, the key to managing these rising costs lies in careful budgeting, understanding the rules and exploring cost‑effective alternatives. As travel preferences continue to shift toward greener transport and flexible mobility, staying informed about tax developments from official sources such as gov.uk and the Department for Transport will help road users adapt and travel wisely.
Disclaimer: The Attached Image in This Article is AI Generated
Source: www.birminghammail.co.uk
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