Spring Statement 2026: What It Means for Drivers, Businesses and the Vehicle Leasing Industry
The UK Government has delivered its Spring Statement 2026, and while it didn’t bring dramatic tax overhauls, it did outline several changes that will affect drivers, businesses, and the vehicle leasing industry over the next few years.
Chancellor Rachel Reeves focused heavily on defence spending, education, and welfare reforms, while also addressing economic pressures caused by global uncertainty and conflicts affecting energy markets.
Despite reduced short-term economic growth and rising unemployment, inflation is falling faster than previously predicted. Because of this, the Government expects to have around £2 billion in additional fiscal headroom, which reduces the likelihood of further tax increases in the Autumn Budget 2026.
But what does this all mean for drivers, company car users, and businesses running vehicle fleets? Let’s break down the key changes in simple terms.
Vehicle Excise Duty (VED) Changes
Vehicle Excise Duty, often referred to as road tax, will increase slightly from 1 April 2026, rising broadly in line with inflation.
For most vehicles registered since April 2017:
Standard VED rates will increase with inflation.
Zero-emission vehicles will keep a frozen first-year rate of £10.
One change that will affect premium cars is the Expensive Car Supplement, which will increase from £425 to £440 per year from April 2026.
This supplement applies to vehicles with a list price above £40,000, starting from the second year of registration and lasting five years.
However, there’s good news for electric vehicles.
From April 2026, the threshold for zero-emission vehicles will rise to £50,000, meaning fewer EVs will be caught by the extra charge.
Electric Vehicle Excise Duty (eVED)
Looking further ahead, the Government is considering introducing a new per-mile charge for electric vehicles starting from April 2028.
The proposed rates are:
3 pence per mile for fully electric cars
1.5 pence per mile for plug-in hybrid vehicles
Based on the average EV driver covering around 8,000 miles per year, this could add roughly £240 annually to running costs.
This proposal is still under consultation and aims to help fund the UK’s road infrastructure as the number of petrol and diesel vehicles declines.
Benefit-in-Kind (BiK) Company Car Tax
Company car tax will also change from April 2026, although electric vehicles will still remain the most tax-efficient option.
For fully electric vehicles:
BiK tax rises to 4% in 2026/27
Increasing gradually to 9% by 2029/30
Even with these increases, EVs remain far cheaper to tax compared to petrol or diesel company cars.
Example
Take an electric car worth £48,495.
With a 4% BiK rate, the taxable value becomes £1,940.
This means the annual tax would be roughly:
£388 per year (£32/month) for a 20% taxpayer
£776 per year (£67/month) for a 40% taxpayer
£873 per year (£73/month) for a 45% taxpayer
For many company drivers, electric vehicles will continue to deliver significant tax savings compared with traditional cars.
Plug-in Hybrid (PHEV) Changes
New emissions testing standards are likely to increase the official CO₂ figures for many plug-in hybrid vehicles, which would normally push them into higher tax bands.
However, the Government has introduced a temporary BiK tax easement to prevent company car drivers from suddenly facing large tax increases.
This easement applies to qualifying vehicles until April 2031, helping around 150,000 company car drivers avoid higher costs during the transition to new emissions standards.
Capital Allowances for Businesses
Businesses investing in electric vehicles will continue to benefit from generous tax relief.
The 100% First Year Allowance for zero-emission cars and EV charging points has been extended until April 2027.
This means businesses can deduct the full cost of qualifying EVs from their taxable profits in the first year.
However, for low-emission vehicles (1-50g/km CO₂), the Writing Down Allowance will reduce from 18% to 14%from April 2026, slightly lowering the amount of tax relief available each year.
Grants for Electric Vehicles
Government incentives for electric vehicles remain in place, with funding extended until March 2030.
The Electric Car Grant offers:
£3,750 for vehicles with the lowest carbon footprint
£1,500 for vehicles with slightly higher carbon scores
Several popular models already qualify for the maximum grant, including:
- Nissan Leaf
- Renault 5
- Renault 4
- MINI Countryman
- Ford Puma Gen-E
Meanwhile, the Plug-in Van Grant continues to offer:
Up to £2,500 for small electric vans
Up to £5,000 for larger electric vans
These incentives continue to support businesses switching their fleets to electric.
Fuel Duty
Fuel duty has been frozen for several years, but changes are coming.
The temporary reduction introduced in 2022 will gradually be reversed:
+1p per litre in September 2026
+2p in December 2026
+2p in March 2027
After this, fuel duty will once again increase in line with inflation.
Electric Vehicle Charging Support
To support the UK’s transition to electric mobility, the Government has also confirmed additional funding for charging infrastructure.
Key measures include:
£100 million for local authorities to accelerate public charging rollout
£100 million for charging infrastructure, alongside previously announced funding
Grants covering up to 75% of the cost of installing a home charger, capped at £500
These initiatives aim to make EV charging easier, cheaper and more accessible, particularly for drivers without private driveways.
What This Means for Drivers and Businesses
Overall, the Spring Statement 2026 maintains the Government’s current strategy rather than introducing major tax changes.
However, the direction is clear:
Electric vehicles remain the most tax-efficient option
Company car tax will slowly rise for EVs but stay competitive
New road funding models for EVs are being explored
Grants and infrastructure support continue to encourage adoption
For businesses and drivers considering their next vehicle, leasing remains a flexible and cost-effective way to adapt to these changing policies without long-term financial commitments.
Final Thoughts
With tax changes, incentives, and new regulations shaping the future of driving in the UK, keeping up with government policy has never been more important.
If you’re looking to switch to an electric vehicle, plug-in hybrid, or efficient company car, leasing can help you stay ahead of the curve while keeping costs predictable.
To explore the latest deals on cars, vans, and pickups, speak to the team at Express Vehicle Contracts today!
📞 0121 427 9477
🌐 expressvehiclecontracts.co.uk
