The Plug-in Car Grant (PiCG), which provided up to £1,500 towards the purchase of new electric vehicles, was discontinued in June 2023. This marked the end of direct purchase subsidies for new electric cars in the UK, leaving Vehicle Excise Duty exemptions, favourable company car BIK rates, and home charging infrastructure grants as the primary remaining government incentives for electric vehicle adoption in 2026.
What Was the Plug-in Car Grant?
The Plug-in Car Grant was introduced in 2011 to incentivise early adoption of electric vehicles when EV technology was more expensive and less practical. At its peak, the PiCG provided up to £4,500 towards new electric cars priced under £50,000. The grant was progressively reduced as EV prices fell and battery technology improved — from £4,500 to £3,000 in 2018, to £2,500 in 2020, to £1,500 in 2021, and finally discontinued for cars in June 2023.
The government's rationale was that electric vehicle prices had fallen to the point where purchase subsidies were no longer necessary to make EVs competitive with conventional vehicles. Critics argued that removing the subsidy disproportionately affected lower-income buyers who relied on the upfront grant to bridge the cost gap between electric and petrol vehicles.
What EV Incentives Remain in 2026?
VED Exemption: Pure electric vehicles registered from April 2017 enjoy a full five-year exemption from Vehicle Excise Duty. This saves £950 over five years compared to a standard petrol car at £190 per year. After the five-year exemption expires, EVs registered before April 2017 continue to pay £0 permanently. This remains one of the most valuable EV incentives available. Related: Electric Vehicle Grants UK 2026 | Electric Vehicle Grants UK 2026 | Electric Vehicle Tax India 2026 — EV Road Tax by State Guide | UAE EV Rebates 2026.
Company Car BIK 0%: Pure electric company cars attract 0% Benefit-in-Kind tax for the 2025/26 and 2026/27 tax years as part of the transitional rate structure. For a higher-rate taxpayer with a company car worth £40,000 P11D, this represents a saving of £14,800 in BIK tax over two years compared to a car emitting 150g/km taxed at 37%. This incentive has been a significant driver of company EV adoption.
Home Charger Grant: The Electric Vehicle Homecharge Scheme (EVHS) grant of up to £300 towards the cost of installing a home charging point was discontinued for most new EV buyers in April 2022. However, some energy suppliers and car manufacturers continue to offer charging point installation subsidies — worth checking with your energy provider or car dealer before purchasing.
Reduced Congestion and ULEZ charges: Electric vehicles are exempt from London's Ultra Low Emission Zone and other city clean air zones, saving £12.50 per day in London. This represents a significant saving for drivers who regularly commute through clean air zones.
Future of EV Incentives
The government has indicated that as EV adoption reaches critical mass, incentives will be progressively withdrawn and replaced with new mechanisms to ensure road funding. Road pricing — a per-mile charge applied to all vehicles including electric cars — has been proposed for post-2027 implementation as fuel duty revenues decline. This would replace the lost revenue from fuel duty as more vehicles transition away from petrol and diesel.
Some European countries including France have already introduced annual charges for electric vehicles. The UK government has consulted on road pricing but has not committed to a specific timeline or rate structure. For EV buyers, the five-year VED exemption represents a firm commitment through at least 2026-2027.
Frequently Asked Questions
Is there still a government grant for buying an electric car?
No. The Plug-in Car Grant was discontinued in June 2023. There is no direct purchase subsidy for new electric cars in the UK as of 2026. However, indirect incentives remain — including five years of free road tax and 0% company car BIK for two tax years.
Do electric cars pay road tax?
Pure electric vehicles registered from April 2017 pay £0 road tax for the first five years. After the five-year exemption expires, EVs registered from April 2017 onwards pay the standard £190 annual rate. EVs registered before April 2017 remain permanently exempt.
Is there a grant for home charging?
The main government home charger grant was discontinued for most buyers in 2022. However, some energy suppliers, car manufacturers, and car dealership programmes continue to offer installation subsidies. It is worth checking with your energy provider and car dealer before paying for installation yourself.
Summary
The Plug-in Car Grant was discontinued in June 2023, ending direct purchase subsidies for new electric cars. Remaining incentives include five years of free road tax, 0% company car BIK for two tax years, and exemption from clean air zone charges. Future road pricing for electric vehicles is likely as fuel duty revenues decline.
This article is for general informational purposes only and does not constitute financial or legal advice. Government incentives and tax rates may change. Verify current schemes with the Office for Zero Emission Vehicles (OZEV) at gov.uk.
Official Resources: GOV.UK Check Vehicle Tax | GOV.UK Vehicle Tax | DVLA Online | MOT Check
Frequently Asked Questions
Q: How much is car tax (VED) in the UK 2026?
Car tax rates in the UK depend on your vehicle's CO2 emissions and list price. Standard rates start from £190 per year for petrol and diesel cars, with zero-rated VED for EVs. First-year rates vary from £0 to £2,605 depending on emissions. Additional premiums apply for vehicles over £40,000.
Q: How do I check if my car is taxed online?
You can check your vehicle's tax status for free on the Gov.uk website at gov.uk/check-vehicle-tax. You'll need your vehicle's registration number (number plate). You can also check via the Motor Insurance Database to verify road tax and insurance status simultaneously.
Q: Can I get a refund on car tax if I sell my vehicle?
Yes — if you sell or scrap your vehicle, you can claim a refund on any full months of remaining road tax. Contact DVLA with the V11 reminder letter or apply online at gov.uk. Refunds are usually processed within 4-6 weeks.
Q: Is road tax refund available when transferring ownership?
No — road tax does not transfer with the vehicle. When you sell your car, the tax is automatically cancelled and any remaining months are refunded to you by DVLA. The new owner must tax the vehicle immediately. As a buyer, always verify the vehicle's tax status before purchasing.
Q: What is the luxury car tax threshold in the UK 2026?
The additional rate for vehicles over £40,000 (list price) adds £410 per year to standard VED rates for years 2-6 of registration. This surcharge brings the annual cost for high-emission vehicles over £40,000 to around £600-690 per year. Pure EVs under £40,000 pay zero VED.