The cost cap

The cost cap is a limit on how much each team can spend in a year on designing, building, developing and running its cars. For 2026 the figure is $215 million per team. It's set out in the FIA's Financial Regulations, and the FIA's Cost Cap Administration checks every team's accounts once the season is over.

It was introduced in 2021. Before that there was no limit at all, and the biggest teams were spending well over $400 million a year while the smallest got by on a fraction of that. The cap was meant to make the sport fairer and to stop teams going bust trying to keep up.

#Why the figure jumped for 2026

From 2021 to 2025 the cap was based on $135 million, plus adjustments for inflation and extra races. The jump to $215 million looks huge, but most of it is a change in what counts rather than more money to spend.

Several costs that used to sit outside the cap are now inside it. The biggest is depreciation: there used to be a separate allowance for capital spending (new buildings, wind tunnels, machine tools), and that has been scrapped and folded into the main cap. The rules on staff time were also tightened, so if someone spends any of their working time on the F1 car, all of their cost now counts. Formula 1 has described the overall effect as roughly neutral.

The cap is adjusted if the calendar has more races than the standard number, and it rises with inflation.

#What's left out

Not everything a team spends counts towards the limit. The main exclusions are:

• driver salaries and retainers
• the pay of the team's three highest-paid staff (usually the team principal and the senior technical people)
• marketing, legal, HR and finance departments
• travel to and from races
• heritage work, such as running and maintaining old cars
• catering, and health and safety costs (both newly excluded for 2026)

This is why you can still see a big gap between the total budgets of the richest and poorest teams. Some teams spend right up to the cap on the car and then a lot more on things the cap doesn't cover. The cap mainly levels out spending on performance.

Engine manufacturers have their own, separate cost cap for power unit development. Teams that buy engines from a manufacturer pay for them as part of their own cap. See engine manufacturers and customer teams.

#What happens if a team overspends

There are three kinds of breach:

For a minor overspend, the penalties can include a fine, a public reprimand, a points deduction, or cuts to the team's wind tunnel and CFD time. A material overspend is treated much more seriously. A points deduction is automatic, and the team can even be excluded from the championship.

A team that admits a breach can agree a penalty with the FIA through what's called an Accepted Breach Agreement. This avoids a long legal process, but the penalty then can't be appealed.

#The Red Bull case

The only overspend so far was Red Bull in 2021, the year Max Verstappen won his first title. The FIA found that the team went over the cap by about £1.86 million, roughly 1.6%, which put it in the minor category. Red Bull argued that much of the figure came down to how it had treated a tax credit and staff catering.

Red Bull agreed to a $7 million fine and a 10% cut in its allowed wind tunnel and CFD time for the following year. The wind tunnel penalty was arguably the bigger blow, because it slowed down the development of its car. Some rival teams felt the punishment was too light given that the overspend came in a year decided at the final race.

Aston Martin was also found to have committed a procedural breach in 2021 and paid a fine, but it didn't overspend.

#Does it work?

The field has got closer since the cap came in, though the cap isn't the only reason. The limits on wind tunnel and CFD time also play a big part, and so do the 2022 and 2026 rule changes. What the cap has clearly done is change how teams operate. They have to choose carefully where to spend, and an upgrade that doesn't work is now a much bigger waste than it used to be.