Business motoring costs are set to change again in 2026, and for many UK businesses, this means higher tax bills, tighter budgets, and increased pressure to control fleet spend.
At a glance: what this guide covers
In this guide, we explain:
Which business motoring costs are increasing in 2026, including vehicle excise duty (VED) and company car tax.
How electric vehicle (EV) rules and thresholds are changing, and what that means for fleets and company cars.
What is happening with fuel duty and ongoing petrol and diesel costs.
How these changes could impact your business motoring budget.
Practical ways to offset rising motoring costs, from fleet optimisation to fuel management.
Whether you run a small fleet, manage company cars or claim business mileage, understanding these changes early can help you plan ahead, reduce unnecessary spend and make more informed vehicle decisions.
Key business motoring cost changes in 2026
Vehicle excise duty (VED) increases
From April 2026, vehicle excise duty (VED) rates are set to increase in line with inflation. For businesses running multiple vehicles, even modest annual increases can add up quickly.
Cars, vans and motorcycles will all be affected, with higher first‑year rates for higher‑emission vehicles continuing to apply. While VED is often seen as a fixed cost, it still needs to be factored into total cost of ownership calculations when choosing or replacing vehicles.
For businesses reviewing fleet composition, this reinforces the importance of selecting vehicles with lower emissions and predictable long‑term costs.
Changes to EV VED and the expensive car supplement
Electric vehicles are no longer exempt from road tax, and in 2026, many EVs will now sit firmly within standard VED structures.
However, there is a notable change that may benefit businesses: the expensive car supplement threshold for zero‑emission vehicles increases to £50,000. This means fewer EVs will attract the additional annual charge, reducing running costs for a wide range of electric company cars.
For businesses considering EVs as part of a fleet transition, this change helps offset some of the rising purchase prices seen in recent years.
Fuel duty remains frozen - for now
Fuel duty is expected to remain frozen until later in 2026. This provides short‑term stability for petrol and diesel prices, which is welcome news for businesses heavily reliant on internal combustion engine vehicles and that use fuel cards.
That said, longer‑term pressure on fuel duty revenue means future increases remain likely. Businesses should view the current freeze as breathing space rather than a permanent saving.
Company car tax and benefit‑in‑kind changes
Company car tax continues to rise gradually, with benefit‑in‑kind (BiK) percentages increasing again in the 2026-27 tax year.
While electric vehicles still benefit from significantly lower BiK rates than petrol or diesel cars, the upward trend means employers and drivers will pay more than in previous years.
Van benefit charges and fuel benefit multipliers are also increasing from April 2026, which may affect businesses that allow private use of vans or provide fuel for personal journeys.
If you operate a company car scheme, this is a good point to revisit whether it still offers value compared with alternatives such as car allowances.
How rising motoring costs could affect your business
Motoring costs rarely increase in isolation. Fuel, tax, insurance, maintenance and administration costs all interact, making it easy for total spend to creep up year‑on‑year.
In 2026, the combination of VED increases and company car tax changes could:
Increase the total cost of fleet ownership.
Reduce the perceived benefit of certain company car schemes.
Push up employee tax liabilities.
Create budget uncertainty for growing fleets.
For many businesses, the challenge is not just absorbing higher costs, but doing so without compromising operational efficiency or driver satisfaction.
How to offset higher business motoring costs in 2026
To help put the 2026 changes into context, the table below compares typical average business motoring costs in 2025 with predicted costs for 2026, based on confirmed policy changes and current government guidance.
The figures are illustrative rather than exact, as real-world costs vary depending on vehicle type, emissions, mileage and how vehicles are used. However, they provide a useful snapshot of where costs are rising, where they are holding steady, and where businesses may see savings, particularly around electric vehicles and tax thresholds.
Cost category | Average 2025 cost (typical) | Predicted Average 2026 cost |
|---|---|---|
Vehicle excise duty (annual) | £195 standard rate for most cars | ~£200 - £225 (RPI uprating) |
Expensive car supplement (EVs) | ~£440 | Threshold raised, saving up to £440 |
Fuel duty (petrol/diesel) | 52.95p per litre | Likely unchanged until Sept 2026 |
Electric per-mile tax | No charge in 2025 | Not yet applied in 2026 (April 2028) |
Company car BIK (zero-emission) | ~3% rate for EV BiK | Expected ~4% - 5% |
HMRC mileage reimbursement rates | 45p per mile up to 10,000 mi | Likely similar unless updated |
Annual running cost (fuel + servicing) | ~£3,000* | Likely ↑ |
While some costs are unavoidable, there are several practical ways businesses can reduce the impact of rising motoring expenses.
Review and optimise your fleet
Fleet optimisation remains one of the most effective ways to control costs. This includes:
Removing underused vehicles.
Matching vehicle type to actual usage.
Avoiding over‑specification.
Electric vehicles can still offer lower fuel and maintenance costs, particularly for predictable urban or regional routes. For higher‑mileage roles, plug‑in hybrids may offer a useful transition option.
Our fuel savings calculator explains how to review vehicle usage and reduce unnecessary spending.
Control fuel spend with smarter purchasing
Fuel remains one of the highest variable costs for businesses. Using a fuel card can help:
Access consistent pricing.
Reduce time spent reclaiming expenses.
Improve visibility of fuel usage.
Support better budgeting.
If you want to understand whether a fuel card could help your business, our fuel card comparison guide breaks down the options.
Revisit company car policies
With company car tax continuing to rise, 2026 is a good time to review your company car policy. Some businesses are moving towards:
Car allowances instead of company cars.
Tiered vehicle lists based on emissions.
Greater choice of electric vehicles.
Small changes to policy structure can significantly reduce tax exposure while still supporting employee mobility.
Improve mileage tracking and reporting
Accurate mileage tracking is increasingly important. It helps:
Ensure correct tax treatment.
Reduce over‑claiming.
Prepare for future road‑pricing or pay‑per‑mile schemes.
Digital mileage tracking tools, such as telematics, can also reduce administrative burden and improve compliance.
Plan ahead for future EV charges
While pay‑per‑mile charging is not expected to apply until later years, the direction of travel is clear. Businesses investing in EVs in 2026 should factor in future road‑use costs when modelling long‑term savings.
Early planning makes it easier to adapt policies and budgets when new charging structures are introduced.
Preparing your business for rising motoring costs beyond 2026
Business motoring costs in 2026 reflect a wider shift towards emissions‑based taxation, greater scrutiny of company car benefits and more data‑driven fleet management.
By reviewing your vehicles, tightening fuel control and reassessing company car arrangements, it is possible to offset rising costs and build a more resilient motoring strategy.
If you want help reducing fuel spend or improving visibility across your fleet, explore our fuel card solutions or contact us today.
