Car Ownership Costs 2026/27: How Much Does It Really Cost to Run a Car?

Buying a car is a significant expense, but the cost does not stop once you have driven it off the forecourt. Fuel, insurance, vehicle tax, servicing, repairs and other running costs can add thousands of pounds to your annual motoring budget.

So, how much does it really cost to own and run a car in the UK in 2026/27?

There is no single figure that applies to every driver. Your costs will depend on factors such as the car you drive, how many miles you cover, your age and driving history, where you live and how much you spend on maintenance.

However, understanding the main costs can help you budget more accurately.

What are the biggest costs of owning a car?

The main costs of car ownership include:

• Car insurance

• Fuel or electricity

• Vehicle Excise Duty (VED)

• Servicing and repairs

• MOTs

• Tyres

• Breakdown cover

• Parking and tolls

• Depreciation

• Finance payments, if applicable

For a typical UK driver, these costs can add up to several thousand pounds each year.

The Department for Transport's National Travel Survey found that people in England travelled an average of 6,082 miles in 2024, although individual mileage varies considerably.

Car insurance

Car insurance is one of the most important costs to consider when budgeting for a vehicle.

The price of your policy will depend on factors including your age, location, driving history, claims history, occupation, vehicle and level of cover.

According to the Association of British Insurers (ABI), the average motor insurance premium paid in Q1 2026 was £560. This is an average across the market, so it should not be treated as a typical price for every driver.

Drivers with convictions, claims or other factors that increase their perceived risk may pay significantly more.

For this reason, it is worth obtaining an insurance quote before buying a car. A vehicle that looks affordable to purchase may have considerably higher insurance costs than another model.

Fuel costs

For petrol and diesel drivers, fuel is another major ongoing expense.

How much you spend depends largely on how far you drive, your vehicle's fuel economy and the price you pay at the pump.

Fuel duty is also changing during 2026/27. The Government has confirmed staged increases of 1p per litre from September 2026, 2p from December 2026 and a further 2p from March 2027. This will gradually return the main petrol and diesel duty rates to their pre-2022 levels.

If you are buying a car, it is therefore worth considering its fuel economy alongside its purchase price.

Electric vehicles have different running costs because they use electricity rather than petrol or diesel, although charging costs can vary depending on whether you charge at home, at work or using public charging networks.

Vehicle tax

Vehicle Excise Duty (VED), commonly known as road tax, is another cost that drivers need to budget for.

From 1 April 2026, most cars registered on or after 1 April 2017 pay a standard rate of £200 after the first year. Cars with higher CO2 emissions can have substantially higher first-year rates.

Electric vehicles are no longer exempt from vehicle tax. From April 2026, electric cars registered between April 2017 and March 2025 pay the standard £200 rate, while electric cars first registered from April 2025 pay £10 in their first year before moving to the standard rate.

Older vehicles have different VED systems, so check the rate applicable to the specific car before buying.

Servicing and repairs

Regular servicing helps keep your car safe, reliable and roadworthy, but maintenance costs can vary significantly.

A newer car may require fewer repairs, while an older vehicle could need replacement parts or unexpected work.

Common maintenance costs include:

• Engine oil and filters

• Brake pads and discs

• Batteries

• Windscreen wipers

• Air conditioning servicing

• Replacement bulbs

• Tyres

• Unexpected mechanical repairs

It is sensible to keep some money aside each month for maintenance rather than only budgeting for the annual service.

MOT costs

Most cars require an MOT once they are more than three years old.

The maximum statutory fee for a car MOT is currently £54.85, although garages can charge less than this.

The MOT itself is only one part of the cost. If your vehicle fails, you may also need to pay for repairs before it can pass.

Tyres and other running costs

Tyres are another expense that can be easy to overlook when calculating the cost of running a car.

How frequently you need to replace them depends on factors such as mileage, driving style, tyre quality and wheel alignment.

You may also need to budget for:

• Breakdown cover

• Car washing and cleaning

• Screenwash and other fluids

• Parking permits

• Tolls and charges

• Windscreen repairs

• Replacement keys

• Fines or penalty charges

Individually, these expenses may appear relatively small, but they can add up over the course of a year.

Don't forget depreciation

If you own your car rather than lease it, depreciation is another cost worth considering.

Depreciation is the reduction in your car's value over time. It does not normally appear as a monthly bill, but it affects how much money you can recover when you eventually sell or part-exchange the vehicle.

The amount a car depreciates depends on factors such as its age, mileage, condition, make, model and demand in the used-car market.

This means the purchase price alone does not tell you the true cost of owning a vehicle.

How much does it cost to run a car in 2026/27?

There is no universal annual figure because every driver's circumstances are different.

Recent 2026 estimates put the cost of running a typical small petrol car at around £3,700 a year when fuel, insurance, VED, servicing, repairs, tyres, MOT, breakdown cover and parking are included, but excluding finance payments. Other estimates based on household spending data put average running costs at around £3,580 a year.

Your actual figure could be considerably lower or higher.

The best way to understand your own car ownership costs is to calculate your expected annual spending on insurance, fuel, tax, servicing, repairs, MOTs, tyres and other motoring expenses.

Final thoughts

Owning a car can provide freedom and convenience, but the purchase price is only one part of the overall cost.

Before buying a vehicle, consider the full cost of ownership, including insurance, fuel, VED, maintenance, MOTs, tyres, parking and depreciation.

Taking these costs into account can help you choose a vehicle that fits your budget, rather than focusing solely on the price you pay for the car itself.

If you're looking for car insurance, Insurance Revolution can help you find cover that suits your circumstances.

Sources

1. GOV.UK, Vehicle tax rates

2. GOV.UK, Fuel duty rates: 2026 to 2027

3. GOV.UK, MOT costs

4. GOV.UK, National Travel Survey 2024

5. Association of British Insurers, Motor premiums remain stable, but cost of repairs still high