Electric vehicles

The government has announced the introduction of a new electric vehicle excise duty (eVED), a mileage-based tax that will come into force from April 2028. 

Designed to replace declining fuel duty revenues, the levy will charge owners of fully electric cars 3p per mile driven. Plug-in hybrids will be charged a reduced rate of 1.5p per mile. These rates will be indexed to the consumer price index (CPI).

The new system will be integrated into the existing vehicle excise duty (VED) process administered by the DVLA. Drivers will estimate their annual mileage when renewing their tax and pay the charge upfront or via monthly direct debit. These estimates will later be reconciled against odometer readings taken during MOTs or at other official service intervals. 

A consultation is now underway to finalise the implementation details, such as how to handle mileage checks for cars under three years old that do not require an MOT.

Also announced was that the threshold for the expensive car supplement (ECS) for battery electric cars will increase from £40,000 to £50,000 in April 2026. The ECS is an additional vehicle excise duty spread over five years and will total £2,370 for a car purchased in 2025-26. 

• Further information

Fuel duty cut extended 

The government will extend the temporary 5p per litre cut in fuel duty until 31 August 2026 and has cancelled the planned inflation-linked increase for the 2026-27 tax year.  

Following the extension, the 5p discount will be phased out gradually to return rates to their March 2022 levels. Duty will increase by 1p on 1 September 2026, a further 2p on 1 December 2026, and the final 2p on 1 March 2027.

• Further information

Removing low-value import relief 

The government has launched a consultation on removing the customs duty relief for low value imports (LVIs), effectively making goods valued at £135 or less subject to tariffs from March 2029 at the latest.

The reforms are intended to level the playing field between high street retailers and online sellers following a tripling of LVI volumes between 2021 and 2024.  

Under the proposed "new LVI customs arrangements", liability for paying customs duty will shift from the consumer (or carrier) to the seller or online marketplace operator, who will be required to remit payments to HMRC on a quarterly basis. 

To mitigate administrative burdens, the consultation explores an optional "simplified tariff schedule" that would group goods into broad duty bands (or "buckets") rather than requiring granular commodity code classification for every item.  

The proposals also suggest mandating a UK-based fiscal representative for overseas sellers without a physical UK presence and potentially introducing a flat "handling fee" per consignment to cover border administration costs.  

Crucially, the existing relief for non-commercial gifts between individuals valued at £39 or less will be maintained. 

Gambling duties 

The government has confirmed it will not proceed with the proposed single remote betting and gaming duty following consultation feedback. Instead, the government will implement a differentiated rate increase.  

From 1 April 2026, remote gaming duty will increase significantly from 21% to 40%. A new remote betting rate will be introduced a year later, from 1 April 2027, set at 25% within the general betting duty. 

To support the horse racing industry, which already pays a statutory levy, remote bets on horse racing will be excluded from the 25% rate and remain taxed at 15%.  

Similarly, to protect land-based operations, self-service betting terminals will remain taxed at 15%, while spread betting and pool betting rates remain unchanged.

In a measure designed to support community-based leisure, bingo duty will be abolished entirely from 1 April 2026.

The government also announced that gross gaming yield bandings for gaming duty will be frozen for the 2026-27 tax year.

New levy on overnight trips

In the run-up to the Budget , the government announced that mayors of strategic authorities in England will be given the opportunity to charge a new levy on overnight stays. 

A consultation has been published on the operation of the new levy, including whether to extend this power to other local leaders, such as foundation strategic authorities. The consultation closes on 18 February 2026. 

All Scottish local authorities can charge a visitor levy and, in September 2025, legislation was enacted in Wales allowing Welsh councils to charge a visitor levy from April 2027.

Extension of the soft drinks levy

The government confirmed ahead of the Budget that it will make the following changes to the soft drinks industry levy (SDIL) from 1 January 2028:

• reduce the current lower threshold at which SDIL applies from 5g of total sugars per 100ml to 4.5g of total sugars per 100ml; and
• remove the exemptions for 
  - milk-based drinks with added sugar. A “lactose allowance” will be introduced to account for naturally occurring sugars; and
  - milk substitute drinks with added sugar. Milk substitute drinks without added sugar will remain outside the scope of SDIL. 

In a press release issued alongside the announcement, the government says that SDIL has encouraged businesses to halve sugar content in popular drinks to avoid the tax, and that it hopes the extension will have a similar result. 

Read ICAEW’s view on the changes.

Air passenger duty

Following a consultation, the government will extend the scope of the higher rate of air passenger duty to cover all private jets above 5.7 tonnes from April 2027. 

Landfill tax

The government will not be proceeding with plans to transition to a single rate of landfill tax by 2030. The government has published a summary of responses that sets out its decisions on all the proposals included in the consultation.