Alternative fuel car tax UK — vehicles running on compressed natural gas (CNG), liquefied petroleum gas (LPG), or bioethanol qualify for reduced first-year VED rates. Here is the guide for 2026.
Alternative Fuel Vehicles: What Qualifies
Alternative fuel vehicles (AFVs) are those that run on fuel other than petrol or diesel — including CNG, LPG, bioethanol (E85), and bifuel vehicles that can run on both petrol and a gas fuel. The key tax benefit is a one-band reduction in first-year VED compared to the equivalent petrol vehicle.
Alternative Fuel First-Year VED Reduction
An AFV receives a one-band reduction in first-year Vehicle Excise Duty. For example, a CNG vehicle that would normally be in the 131-150g/km band (£600) is reduced by one band. The exact reduction depends on the vehicle's CO2 figure and the applicable band table. AFVs at 0g/km would have no reduction needed — they already qualify for £0.
CNG and LPG Vehicle Road Tax
CNG (compressed natural gas) and LPG (liquefied petroleum gas) vehicles that qualify as AFVs get the first-year VED reduction. Standard annual rates from year 2 onwards are the same as petrol — £190/year. The first-year saving is the primary benefit.
Biofuel and E85 Vehicles
Vehicles running on E85 bioethanol (85% ethanol, 15% petrol) qualify as AFVs and receive the one-band first-year VED reduction. These are most commonly flex-fuel vehicles capable of running on both standard petrol and E85. The reduction applies only in the first year — years 2 onwards use standard rates.
Conclusion
Alternative fuel car tax UK: one-band reduction in first-year VED for CNG, LPG, bioethanol. Standard annual rate applies from year 2. GOV.UK VED tables show exact rates.