UK Drivers Face Steep Tax Hikes And New Rules In 2026

Motorists across the United Kingdom are bracing for a fresh wave of changes to car taxation and motoring regulations as Chancellor Rachel Reeves prepares to deliver the 2026 Spring Statement on March 3. While the statement itself is not expected to introduce sweeping new tax policies, it will clarify a suite of measures first announced in the 2025 Autumn Budget and set the stage for a year of significant adjustments affecting drivers of all stripes—from owners of high-performance combustion vehicles to those behind the wheel of the latest electric cars.

According to Carwow, the government’s approach to fuel, tax, and roads in 2026 is a blend of gradual increases and targeted reforms. The headline for many drivers is the extension of the 5p-per-litre fuel duty freeze, which now lasts until August 31, 2026. But the relief is temporary: starting in September, the duty will rise by 1p, followed by further increases of 2p in December and another 2p in March 2027. This phased return to higher fuel duties is designed to ease motorists back into pre-freeze levels after years of stagnation, but it will inevitably mean higher prices at the pump as the year progresses.

To help keep a lid on sudden fuel price spikes—commonly referred to as “rocket and feather” pricing—the government is rolling out the mandatory Fuel Finder scheme. Under this new initiative, petrol stations must report live price changes within 30 minutes to a central database. As Carwow reports, this measure is expected to save drivers between 1p and 6p per litre, curbing the worst excesses of price volatility and giving consumers more transparency and control over where to fill up.

But it’s the changes to Vehicle Excise Duty (VED) that are set to bite hardest for many. From April 1, 2026, VED will rise in line with the Retail Price Index (RPI), nudging the standard rate for cars registered after April 2017 from £195 to £200 per year. The impact is even starker for those buying new, high-emission combustion vehicles. As reported by the Daily Express, first-year VED rates for models emitting over 255g/km of CO2 will climb from £5,490 to a whopping £5,690. The list of affected cars reads like a who’s who of luxury and performance brands—Audi, BMW, Mercedes, Ferrari, Lamborghini, Porsche, and more. For these 59 specific models, the cost of hitting the road just got steeper.

Electric vehicle (EV) owners, meanwhile, find themselves in a shifting landscape. While the first-year VED for EVs remains as low as £10, the government is tweaking the rules on luxury car taxation. The threshold for the so-called “Expensive Car Supplement”—an annual luxury tax—rises from £40,000 to £50,000 on April 1, 2026. This means that buyers of zero-emission vehicles priced under £50,000 will be exempt from the £425 yearly supplement, a move aimed at keeping mid-range EVs within financial reach for more consumers.

Company car drivers and their employers should also take note: the Benefit-in-Kind (BiK) rate for electric company cars will increase from 3% to 4% starting April 6, 2026. While the change may seem modest, it represents another incremental cost for those planning their fleet and tax arrangements in the coming financial year, as highlighted by Carwow.

On the regulatory front, 2026 brings a taste of the digital future. A wider public trial of digital driving licences is launching this February, enabling motorists to access their licence via the GOV.UK One Login app. While the convenience is clear, officials still recommend keeping a physical card as a backup—just in case technology decides to have an off day.

Learner drivers, too, will face new challenges. The theory test is being updated to include questions on CPR and the use of defibrillators (AEDs), a move designed to boost emergency response knowledge among the next generation of drivers. As Carwow notes, the aim is to improve safety not just for drivers, but for passengers and bystanders as well.

Londoners and regular visitors to the capital will have noticed a sting in the tail of the city’s congestion charge. The daily fee has now risen to £18, and the previous 100% exemption for electric vehicles has ended. However, those registered for Auto Pay can still get a 25% discount, reducing the daily cost to £13.50. It’s a sign of the city’s shifting priorities as it seeks to balance congestion management with the growing number of EVs on its roads.

Looking further ahead, November 2026 marks the mandatory introduction of Euro 7 emissions standards for all new cars and vans. This new regulatory bar is expected to drive further innovation in emissions technology, but it also means that manufacturers and buyers alike will need to keep a close eye on compliance and costs.

For those considering a new car purchase, the advice is clear: pay close attention to the fine print. The Daily Express reports that VED is a legal requirement, and failure to pay can result in fines or even vehicle confiscation. The government is adamant that the rules apply to everyone, regardless of whether you’re driving a modest hatchback or a supercharged sports car.

The changes come on the heels of a dramatic overhaul in 2025, when first-year VED rates for the most polluting cars doubled from £2,745 to £5,490. The latest increases, though less dramatic, reinforce a broader trend: the UK’s motoring tax regime is becoming ever more finely tuned, with incentives for cleaner vehicles and escalating penalties for high emitters.

For drivers of petrol and diesel cars, especially those with a taste for performance and luxury, the message is unmistakable. The cost of ownership is rising, and the government is using the tax system to nudge consumers toward cleaner, greener options. For EV buyers, the landscape is more nuanced. While some incentives remain, the gradual phasing out of exemptions—such as the end of the London congestion charge break—signals that even electric motoring won’t remain tax-free forever.

As always, the devil is in the details. With changes coming thick and fast—from digital licensing to new emissions standards—motorists are advised to stay informed and plan ahead. Whether you’re shopping for a new car, managing a company fleet, or simply trying to keep your motoring costs under control, 2026 is shaping up to be a pivotal year on Britain’s roads.

With the Spring Statement just delivered and a raft of new measures set to take effect in the coming months, drivers have little choice but to buckle up and prepare for a bumpy ride through the evolving world of UK motoring regulation.