Rachel Reeves, the Labour Party Chancellor, has confirmed new Vehicle Excise Duty (VED) bands that will see drivers charged £225 for their car tax. This change affects vehicles first registered after March 2001 and before April 2017, with rates split across 13 bands based on CO2 emissions.
How VED Bands Work
In simple terms, the lower the CO2 emissions, the lower the tax band. However, since 2025 VED rule changes, cars emitting below 100g/km no longer qualify for free road tax. Owners of such vehicles now pay £20 annually for VED.
Petrol and Diesel Cars
Road tax for petrol and diesel cars registered between March 2001 and April 2017 is broadly similar. VED band F, covering emissions of 141 to 150 g/km, will see drivers charged £225.
Understanding VED Payments
To drive a car in the UK, you must pay Vehicle Excise Duty (VED), and failure to do so can result in a fine. The amount you pay depends on when your vehicle was first registered. Since 2001, road tax has been based on CO2 emissions for newly registered vehicles to encourage environmentally friendly choices. Some cars, such as those for disabled drivers, are exempt from VED, but you still need to apply for road tax and claim an exemption. If you pay your VED six-monthly or monthly by direct debit, a small surcharge applies.
Additional Details
Since April 2018, cars have fallen into different road tax categories depending on their first registration date. Opting for instalments increases the total cost. Revenue from VED funds essential government spending, including road improvements, infrastructure, health, and education. The DVLA Annual Report 2024/2025 recorded £8.4 billion in VED revenue.
