March is traditionally one of the busiest months in the UK car market. From March 1, 2026, all newly registered vehicles will carry the new “26” number plate. The change marks the first registration update of the year and typically leads to a surge in new car purchases.
Alongside the new registration plates, several motoring rules and tax adjustments are also coming into effect. These changes involve Vehicle Excise Duty (VED), company car taxation, advisory fuel rates and number plate regulations. For drivers and car buyers, understanding these updates is important because some of them could add thousands of pounds to the overall cost of owning a vehicle.
Plates
From March 1, 2026, any newly registered vehicle will receive a “26” number plate. The UK updates number plates twice each year, with the March update reflecting the year of registration.
For many drivers, this period is attractive because newer plates often help maintain higher resale values and create demand in the new car market. As a result, dealerships typically see an increase in purchases during March.
However, experts note that buyers should pay attention not only to the new registration but also to the financial rules connected to new vehicles.
Supplement
One of the most significant costs affecting new car buyers is the expensive car supplement applied to Vehicle Excise Duty.
This rule applies to vehicles with a list price above £40,000. If a car exceeds this threshold, owners must pay an additional charge for five years after the first registration.
According to motoring experts, even small upgrades can push a vehicle over the threshold.
| Vehicle Price | Supplement Applied | Total Extra Cost |
|---|---|---|
| £39,995 | No | £0 |
| £40,000+ | Yes | £410 per year |
| Five-year total | – | £2,050 |
Importantly, the supplement is based on the official list price rather than the discounted price paid at the dealership. That means negotiating a lower price does not avoid the additional tax.
Optional extras such as upgraded trim packages, technology bundles or cosmetic features can increase the official price enough to trigger the supplement.
EVs
Electric vehicles have recently experienced changes to their tax treatment as well. For several years, EV owners benefited from a full exemption from Vehicle Excise Duty.
That exemption has now ended.
Electric vehicles must now pay standard VED rates, bringing them closer to the taxation structure applied to petrol and diesel cars.
However, there is one upcoming adjustment. From April 2026, the expensive car supplement threshold for electric vehicles will increase to £50,000.
This means buyers considering a higher priced electric vehicle may benefit from waiting until April before registering their car.
VED
Each April, the UK government updates Vehicle Excise Duty rates. For the 2026 to 2027 tax year, the rates are expected to rise in line with inflation using the Retail Prices Index.
Here are the main points drivers should know.
| Rule | Explanation |
|---|---|
| Standard rate increase | Annual VED will rise with inflation |
| First year rate | Based on vehicle CO2 emissions |
| Expensive car supplement | Applies to vehicles over £40,000 |
| EV taxation | Electric cars now pay standard VED |
Although the increase is linked to inflation rather than a new tax policy, many drivers will still notice a higher annual payment from April 1.
Penalties
Drivers who fail to tax their vehicles can face significant penalties.
If a vehicle is kept on the road without valid tax, enforcement action can follow quickly.
Possible consequences include:
- An automatic £80 fine, reduced if paid quickly
- Court fines of up to £1,000
- Vehicle clamping or seizure by enforcement officers
The DVLA does not provide a grace period after a vehicle is registered. The car must be taxed immediately once it is registered in the owner’s name.
Fuel
Another change occurring in March relates to HMRC’s Advisory Fuel Rates. These rates are reviewed quarterly and determine how much employees can claim for business mileage when driving company cars.
Businesses often use these figures to reimburse staff without triggering additional tax charges.
Changes to these rates can affect several groups:
- Company car drivers claiming mileage
- Employers reimbursing travel expenses
- Self employed drivers calculating business costs
Accurate mileage records remain important because the applicable reimbursement rate may change during the year.
Plates Rules
Drivers should also ensure their number plates meet legal standards. The DVLA has strict guidelines covering plate design and display.
Breaking these rules can lead to serious penalties.
Legal requirements include:
- Correct font and spacing
- No rearranging letters to create words
- No coloured or tinted backgrounds
- Supplier details and British Standard markings
Vehicles with illegal plates may fail their MOT test, and drivers can receive fines of up to £1,000. Authorities have also increased enforcement efforts to detect cloned or altered number plates.
Company
Company car drivers may also see changes in the coming tax year. Benefit in Kind (BIK) tax is increasing by 1 percent for the 2026 to 2027 tax year.
BIK rates are based on several factors:
| Factor | Description |
|---|---|
| CO2 emissions | Lower emissions mean lower tax |
| Vehicle list price | Includes extras and VAT |
| Tax band | Determines percentage rate |
Electric vehicles remain the lowest taxed option, with a BIK rate of about 4 percent compared with rates that can reach 37 percent for high emission vehicles.
For some drivers, switching to lower emission vehicles could help reduce overall tax costs.
Planning
Motoring experts suggest several steps drivers can take to manage these changes.
Drivers may consider checking their VED renewal date before April to prepare for potential increases. Anyone planning to buy a new car should review the vehicle’s tax band and official list price before making a purchase.
Insurance quotes should also be compared before buying a newly released 26 plate vehicle, as premiums can sometimes be higher for brand new models.
Finally, drivers should review optional extras carefully, as small upgrades could push the car over the £40,000 threshold and trigger additional tax charges for several years.
Knowing these updates can help drivers avoid unexpected costs and plan their motoring expenses more effectively.
FAQs
What is the 26 number plate in the UK?
It marks cars registered from March 2026.
What is the expensive car supplement?
An extra VED charge for cars over £40,000.
Do electric cars pay road tax now?
Yes, EVs now pay standard VED rates.
What happens if you drive an untaxed car?
You may face fines, clamping or court action.
