There are a number of commercial vehicle tax changes for 2026-27 that business owners need to be aware of, including changes to what’s actually classed as “commercial”.
So if you use lorries or vans to transport goods or provide your services, read on to explore the changes that might impact your costs. There are also changes that will impact you if your employees use company cars.
Car tax changes – higher vehicle excise duty
All brand-new vehicles are subject to paying a higher rate of tax (known as vehicle excise duty or ‘VED’) for the first taxable year of owning the car. The rate depends on your vehicle’s CO2 emissions. Vehicle excise duty rates increased for cars from 1 April 2026.
Note that the table below applies to cars. Vans (light goods vehicles up to 3,500kg) pay a flat rate of £360 from 1 April 2026. See the table below for a full list of the VED increases
| CO2 emissions | Diesel cars (TC49) that meet the RDE2 standard, petrol cars (TC48), alternative fuel and zero emission cars | All other diesel cars (TC49) |
|---|---|---|
| 0g/km | £10 | £10 |
| 1 to 50g/km | £115 | £135 |
| 51 to 75g/km | £135 | £280 |
| 76 to 90g/km | £280 | £365 |
| 91 to 100g/km | £365 | £405 |
| 101 to 110g/km | £305 | £455 |
| 111 to 130g/km | £455 | £560 |
| 131 to 150g/km | £560 | £1,410 |
| 151 to 170g/km | £1,410 | £2,270 |
| 171 to 190g/km | £2,270 | £3,420 |
| 191 to 225g/km | £3,420 | £4,850 |
| 226 to 255g/km | £4,850 | £5,690 |
| Over 255g/km | £5,690 | £5,690 |
Read more about Vehicle Excise Duty and how it impacts business drivers.
During the 2025 Autumn Budget, an additional charge was announced for the Vehicle Excise Duty system. From 1 April 2028, electric car drivers (but not van drivers) will pay a road charge of 3p a mile (with plug-in hybrid drivers paying 1.5p a mile).
Mileage will be checked annually, typically during an MOT. These rates will increase from 2029-30.
Paying tax on electric vehicles
If you use an electric van as a commercial vehicle, it’s important to note that, as of 1 April 2025, all owners of all electric vehicles (EVs) will pay the standard rate of road tax. Until 31 March 2025, EVs were exempt from road tax.
Plus if you’ve bought an EV on or after 1 April 2026, you’ll also have to pay a first-year rate of £10 and an Expensive Car supplement of £440 if the list price is more than £50,000.
Fuel duty remains frozen
The fuel duty rate (currently 52.95p per litre) is staying frozen until 31 December 2026. Businesses with a fleet of commercial vehicles will want to watch out for news of the freeze potentially ending.
New classification for double-cab trucks
Double cab pick-up trucks are no longer classified as vans for benefit-in-kind (BIK) purposes based on payload, as of 6 April 2025. Instead, they’re classified by their primary suitability for carrying goods. The VAT input tax position remains unchanged.
Most double cab pick-ups are now classified as cars – meaning your BIK payments may have gone up. These vehicles will now be taxed alongside some of the most polluting petrol and diesel cars, which generally attract a rate of up to 37%.
For capital allowances, the new test applies to expenditure on or after 1 April 2025 (corporation tax) and 6 April 2025 (income tax).
However, there’s a way to hold off this increase. If you purchased, leased, or ordered a new double cab pick-up truck before 6 April 2025, they’ll keep their commercial vehicle classification until the earliest date between disposal, lease expiry, or 5 April 2029 (whichever happens first).
Vehicle advisory fuel rates
Advisory fuel rates were increased from 1 September 2026, meaning you’re likely to see costs increase if your business uses company cars.
hese rates only apply to cars and change quarterly. The cost per mile is 14p for petrol cars with an engine size of up to 1,400cc and 15p for diesel cars with an engine size of up to 1,600cc.
Congestion charges for EVs
It’s also worth being aware of changes to the Congestion Charge. From 2 January 2026, electric cars get a 25% discount and pay £13.50 with Auto Pay on the standard £18 charge.
If you use an electric van for London-based work, you can get a 50% discount and pay £9 with Auto Pay, so you should factor this into your budgeting.
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