Imagine waking up in 2026 to discover that your car, the vehicle you use every day to get to work, drop the kids at school, do the weekly shop, is now going to cost you significantly more to run not because petrol prices have gone up or insurance has increased, but because Rachel Reeves has decided that millions of drivers need to pay more tax. The Chancellor unveiled a host of new car tax changes in the recent Autumn Budget that will fundamentally reshape how much British motorists pay, headlined by the Electric Vehicle Excise Duty which will see electric and hybrid owners charged per mile for the first time. Some drivers may not see their prices change at all, which sounds reassuring until you realise that some could be slapped with expensive costs, particularly if they have highly polluting vehicles, which is government-speak for if you drive anything other than the newest, most expensive electric car, prepare to get hammered. Reeves claimed she was providing support to boost the British car industry and would save more than one million motorists £440 a year, which sounds generous until you do the mathematics and realise that for every motorist saving money, there are probably several paying significantly more. This is classic government sleight of hand where they announce big savings for some people to distract from the fact they are taxing millions of others, and it is about to hit your wallet harder than you might think.
Let us start with the headline change that has got motoring groups and drivers across the country absolutely up in arms: the Electric Vehicle Excise Duty. For years, electric vehicle owners have enjoyed a significant tax advantage over petrol and diesel drivers. They paid nothing in Vehicle Excise Duty, which was a major incentive to switch to electric and part of the government's strategy to encourage the transition to zero-emission vehicles. But that free ride, quite literally, is coming to an end. From April 2026, electric and hybrid owners will be charged per mile, which represents a fundamental shift in how EVs are taxed and will significantly increase the running costs for anyone who has bought an electric vehicle based on the promise of lower taxation.
The per-mile charging system is particularly concerning because it means that the more you drive, the more you pay, which sounds obvious but has significant implications. If you use your electric vehicle for long commutes or for business purposes, your tax bill could be substantial. The government has not yet announced exactly what the per-mile rate will be, which is causing enormous uncertainty and anxiety among EV owners who cannot accurately budget for this new cost. The cynic in you might wonder whether the government is deliberately keeping the rate vague until after the policy is locked in, at which point they will announce a figure that is higher than people were expecting but that they will have to accept because there is no going back.
The Chancellor confirmed in the Autumn Budget that Vehicle Excise Duty for cars, vans, and motorcycles would be changing across the board, not just for electric vehicles. From April 1st, 2026, the government will uprate tax rates for these vehicles in line with the Retail Price Index. Now, uprating with inflation sounds reasonable and even fair until you remember that wages are not keeping pace with inflation for many people, which means this tax increase represents a real-terms reduction in disposable income. You will be paying more for your VED while potentially not earning proportionally more, which squeezes household budgets and makes life more expensive for working families.
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