Car owners are set to feel a greater financial squeeze as the cost of running a vehicle in 2026 is set to rise. In 2025, the average cost of running a car in the UK was £3,484, an overall increase of 8% compared to 2020.(1) With inflation, supply chain pressures, and government policies all contributing to higher outgoings, vehicle running costs are changing.
To help business owners navigate the change in vehicle running costs, Matthew Briggs, CEO at Right Fuel Card has offered his expert insights on how running costs are changing, and what businesses can do to adapt.
How Running Costs Are Changing For Businesses
- EVs No Longer Exempt From Road Tax
“From April 2025, electric vehicles in the UK will no longer be exempt from paying Vehicle Excise Duty (road tax). Until now, fully electric cars paid nothing because they produce zero tailpipe emissions, but the Government is removing this exemption, so EV owners contribute in the same way as petrol and diesel drivers.”
“Most EVs registered from April 2017 onwards will move onto the standard rate of road tax (currently £195 per year), while new EVs registered from April 2025 will pay a small first-year rate followed by the standard rate thereafter. According to Right Fuel Card, only 9% of businesses currently operate EVs in their fleet, and these changes could hinder the rise of EVs within companies.”
- Congestion Charge Changes
“From early January 2026, Transport for London (TfL) will end the long-standing 100% exemption that allowed electric vehicles (EVs) to drive in Central London’s Congestion Charge Zone for free. This exemption applied under the Cleaner Vehicle Discount for many years to encourage EV uptake, TfL says the policy was undermining congestion management goals.”
“According to Right Fuel Card, 31% of business owners, government incentives would be key in encouraging them to adopt, or transition, to an EV fleet, highlighting the importance of financial support.”
- Increases in Car Supplement
“From 1 April 2026, the UK Government is increasing the threshold at which the Vehicle Excise Duty expensive car supplement applies to zero-emission vehicles (EVs) from £40,000 to £50,000. Under the VED system, any car with a manufacturer’s list price above a certain level is liable for an extra annual charge, traditionally known as the Expensive Car Supplement on top of the standard road tax. This surcharge, which currently adds around £425 per year for five years after the initial registration.”
- BiK increases
“In April 2025, the government confirmed that Benefit-in-Kind (BiK) tax rates for company cars would rise gradually, including for electric vehicles (EVs). BiK is the tax an employee pays on the personal use of a company car; it’s calculated as a percentage of the car’s list price (P11D) multiplied by the employee’s income tax rate. For many years, EVs enjoyed exceptionally low BiK rates, but this is now being phased up to reflect broader tax changes.”
How Businesses Can Adapt
According to Briggs, business owners can still keep vehicle costs down in 2026 by being strategic about the cars they choose and how they fund them.
Expensive Car Supplement
“If you are opting for electric vehicles, those under £50,000, this will help avoid the Expensive Car Supplement when the higher threshold comes in and choosing lower-spec trims that don’t creep over pricing bands can save thousands over five years.”
Benefit-in-Kind (BiK)
“Despite increases, EV Benefit-in-Kind (BiK) rates remain far lower than petrol and diesel, so company car or salary-sacrifice schemes are still one of the most tax-efficient ways to run a vehicle. This means that, for both employers and employees, electric vehicles continue to offer a substantial tax advantage.”
Car Leasing
“Leasing can also help smooth cash flow and avoid depreciation risk, while reviewing mileage policies, route planning, and charging behaviours can further reduce running costs, especially if you can charge your fleets or company car during off-peak hours.”
Briggs comments, “Running a fleet is set to become more expensive in 2026, and business owners should be planning for that now. The removal of certain EV exemptions, changes to congestion schemes and rising Benefit-in-Kind rates all add up to higher running costs. But there are still ways to stay in control, from leasing contracts to ensuring you buy a vehicle for under £50,000.”
For more information about Right Fuel Card, please visit; https://www.rightfuelcard.co.uk/business/small-business-fuel-cards
Right Fuel Card is an independent distributor of fuel cards with a mission: to simplify the fuel management of businesses across the UK. Right Fuel Card is proud to be part of Edenred, a leading digital platform for services and payments and the everyday companion for people at work, connecting 60 million users and 2 million partner merchants in 45 countries via close to 1 million corporate clients.
