Upcoming changes to Vehicle Excise Duty (VED) rates will take effect in April 2026, impacting owners of numerous popular vehicles in the UK with significant tax increases. Specifically, 59 models from 24 manufacturers, such as Ford, BMW, and Mercedes, will incur a £5,690 annual fee starting April 1, 2026.
Background on VED and Recent Adjustments
Vehicle Excise Duty, commonly referred to as car tax or road tax, funds the use of cars, vans, motorcycles, and other vehicles on public roads across the UK. The Driver and Vehicle Licensing Agency (DVLA) gathers approximately £5 billion in VED revenue each year, though this funding supports various public services, including education and healthcare, rather than exclusively road maintenance.
These taxes adjust annually to align with inflation. The standard rate for most vehicles is currently £195, set to increase to £200 per year for cars registered after 2017. However, the most substantial hikes target new combustion-engine vehicles with high emissions.
Impact on New and Existing Vehicles
Owners of brand-new models emitting more than 255g/km of CO2 will face a year-one rate of £5,690 from April 1, 2026, marking a rise from the previous £5,490. This adjustment builds on modifications introduced last year, which raised fees by up to £2,745 for certain high-emission cars.
Vehicles registered between 2001 and 2017 will see changes based on emission bands. Those in Band M, exceeding 255g/km of CO2, will pay £790 annually, up from £760.
Certain vehicles remain exempt, including those used by disabled drivers, ensuring targeted relief where applicable.
Government Announcement and Future Outlook
These updates follow the Autumn Budget presented by Chancellor Rachel Reeves. Officials have confirmed: “As announced at Budget 2025, the government will introduce legislation in Finance Bill 2025-26 to uprate Vehicle Excise Duty rates for cars, vans and motorcycles in line with the Retail Price Index (RPI) for 2026 to 2027. This will take effect from April 1, 2026.”
Drivers should prepare for these changes, particularly those considering high-emission purchases, as the adjustments aim to reflect inflation and environmental priorities.
