Understanding the 2026 UK ZEV Mandate changes

What is the UK ZEV Mandate?

Introduced in 2024, the ZEV Mandate is a legally binding government policy designed to reduce the number of cars with an Internal Combustion Engine (ICE) being sold in the UK.

It requires that from 2035, all new cars and vans sold must be fully zero emission.

Over the intervening period, it sets out a rising percentage of a manufacturer’s new vehicle sales which must be zero-emission models, such as Electric Vehicles (EVs).

Why has it been introduced?

In 2019, the UK became the first major economy in the world to commit to achieving net zero greenhouse gas emissions by 2050 as part of its efforts to reduce the impact of climate change.

Transport was identified as the sector with the largest greenhouse gas emissions, producing 26% of the UK’s total emissions in 2021. Road vehicles were found to produce the majority (91%) of emissions from domestic transport.

The UK ZEV Mandate was introduced to reduce these emissions and support the UK’s net zero ambitions.

How does the ZEV Mandate work?

It can be complicated, but here are the essentials that are helpful to understand:

There are annual targets

Each year, a certain percentage of the new cars sold by manufacturers must be ZEVs. The percentage will increase each year until 100% is achieved in 2035.

The ZEV Mandate targets

Allowances are used to track compliance

Manufacturers are allocated allowances based on their annual targets. Each allowance effectively gives a manufacturer permission to register one non-zero-emission car or van and an allowance must be surrendered for every such vehicle they register.

Compliance payments apply if targets are not met

If manufacturers do not meet their targets, they can use permitted flexibilities or acquire allowances from manufacturers that have exceeded theirs. If they still have a shortfall, they must make a compliance payment of £12,000 per car or £15,000 per van.

What are the changes?

While the overall goal of zero emissions by 2035 remains in place, the government announced changes to the Zero Emission Vehicle Mandate in April 2025. These have since been incorporated into the Vehicle Emissions Trading Schemes, with the latest amendments taking effect from January 2026.

• Small- and micro-volume manufacturers are exempt from the 2030 phase-out rules, which require most new cars to be zero emission or hybridised in some way from 2030. Small-volume manufacturers will, however, need to meet bespoke requirements to reduce fleet emissions on the pathway to 2035. These exemptions do not extend beyond 2035, when all new cars and vans must be zero emission.
• From 2025, fines were reduced from £15,000 to £12,000 for cars, and from £18,000 to £15,000 for vans.
• Manufacturers who produce both cars and vans can transfer credits between the two types of vehicle. For example, should a manufacturer exceed their car target but fail to meet their target for vans, it can transfer excess car credits over to its vans and still achieve compliance. A car credit can be exchanged for 0.4 van credits and one van credit can be exchanged for 2 car credits.
• Manufacturers will be able to continue selling new ICE vans until 2035. For cars, the sale of new pure ICE models will end in 2030, although some exempt vehicles may still be permitted after that date. Hybrid and plug-in hybrid cars and vans can continue to be sold until 2035.

• Manufacturers have also been given greater flexibility over how they meet the targets. Surplus ZEV allowances can be banked for use in any of the following three years, while manufacturers can borrow a limited proportion of allowances from the following year until 2029, with borrowed allowances to be repaid by 2030.

   

What are the benefits of the ZEV Mandate for drivers?

The ZEV Mandate is targeted at manufacturers, but it presents a range of benefits for drivers, and UK citizens more broadly, as well as keeping the country on track to meet its net-zero targets.

Lower EV prices

The price of electric vehicles is expected to fall in the coming years. Customers looking to buy are also likely to have a wider range of affordable models to choose from, with the latest technology available across more vehicle types, including SUVs and vans.

Advancement in EV technology

The ZEV targets are driving an increase in manufacturer investment in zero-emission technology which means improvements in areas such as vehicle charging, speeds and range may also be expected as the transition to a fully electric society advances.

Improved infrastructure

To keep up with the growing number of zero-emission vehicles on the roads, spending on the supporting infrastructure is predicted to rise. The government estimates that around 300,000 public EV charge points could be needed by 2030 and an increase in the number of electric vehicle (EV) chargers is already underway.

Reduced air pollution

As battery electric vehicles replace petrol and diesel models, they can help improve local air quality because they don’t produce exhaust emissions. The transition can also help reduce greenhouse gas emissions from road transport, supporting the UK’s wider climate goals.
 

Could the ZEV Mandate change again?

The ZEV Mandate remains under review as the government considers how best to support manufacturers and drivers through the transition to zero-emission vehicles. Any further changes could provide manufacturers with additional flexibility over the pathway to 2035.

For now, however, the existing targets remain in place, including the requirement for 80% of new cars sold to be zero emission by 2030 and for all new cars and vans to be fully zero emission by 2035.

ALPHERA Financial Services offers a range of specialist motor finance products for new and used electric, hybrid and internal combustion engine (ICE) cars and vans. For more news and updates from our experts, keep an eye on our news page.