The Government has issued a comprehensive update regarding forthcoming alterations to road tax, officially known as Vehicle Excise Duty (VED). This announcement comes in response to a parliamentary question, confirming that VED rates are set to increase in line with inflation once again in April 2026.
New Charges for Electric and Hybrid Vehicles
Under the fresh proposals, significant changes are being introduced for drivers of electric and plug-in hybrid vehicles. Specifically, drivers of electric vehicles will face a charge of 3p per mile, while those operating plug-in hybrids will be required to pay 1.5p per mile. Both of these rates will be subject to future increases linked to inflation, ensuring they remain aligned with economic conditions.
The Government has initiated a formal consultation on these plans, inviting public feedback to refine the implementation. The consultation document elaborates on the rationale behind the new charges, stating: "It will be set at half of the equivalent rate of fuel duty for electric cars, and half again for plug-in hybrid cars. eVED will ensure all car drivers contribute, but will still maintain important incentives to switch to an electric vehicle. eVED will not require 'trackers' in cars, nor will the government ask people to interact with a whole new tax system: car drivers will pay for the miles they drive alongside paying their usual road tax (VED)."
Background and Previous Changes
This development builds on recent adjustments to VED. From April 2025, electric vehicles became subject to vehicle excise duty for the first time, marking a shift in policy as the adoption of electric cars increases. In the Autumn Budget, Chancellor Rachel Reeves announced further modifications, including an increase in the VED Expensive Car Supplement threshold from £40,000 to £50,000, effective from April 2026.
Additionally, VED rates for all types of vehicles—including cars, vans, and motorcycles—will rise in line with inflation from April 2026. This adjustment applies universally, calculated based on factors such as the vehicle's date of first registration, weight, or CO2 emissions.
Government Response to Parliamentary Inquiry
The confirmation of these changes followed a written parliamentary question posed by Independent MP James McMurdock to Chancellor Rachel Reeves. He inquired whether she plans to "review the structure of Vehicle Excise Duty." Treasury minister Dan Tomlinson provided the Government's official reply, clarifying the nature of VED.
He stated: "Vehicle Excise Duty (VED), sometimes known as 'road tax' or 'car tax', is a tax on vehicles used or kept on public roads. Different rates apply to cars, vans, and motorcycles, and the rate for each vehicle is calculated according to a range of factors, such as its date of first registration, weight, or CO2 emissions." However, he acknowledged that significant changes are forthcoming, as reported by various sources, indicating a proactive approach to updating the tax system in response to evolving vehicle technologies and environmental considerations.
This update underscores the Government's commitment to ensuring all drivers contribute fairly to road maintenance and environmental initiatives, while still encouraging the transition to cleaner vehicles through structured incentives.
