Drivers are facing increased car tax charges from Wednesday, April 1, under the Labour government. Chancellor Rachel Reeves has confirmed that Vehicle Excise Duty (VED) rates will rise, with the standard rate increasing by £5 from £195 to £200 per year for most motorists.
New VED Rates and Bands
For the majority of cars registered after 2017, the standard VED rate will now be £200 annually. Brand new vehicles may be subject to lower first-year charges, but the standard rate applies from the second year onwards. The RAC explained: "Road tax rates are automatically adjusted by the Government in line with inflation each year."
Under the changes, cars registered after 2017 will pay the standard VED rate. This charge previously stood at £195 per year, but the new rise from April 1 has added £5 to costs, bringing annual bills to £200.
Payment Options
The RAC provided further details: "From 1 April 2026, the standard tax rate for all petrol, diesel or hybrid cars registered after 1st April 2017 rises to £200. If you pay for six months tax, it'll cost £110, or £105 if you opt to set up a direct debit. If you pay in 12 monthly instalments, your total car tax cost will be £210."
Expensive Car Supplement
In another blow, some models will be subject to the Expensive Car Supplement. This is an additional £440 fee, up from £425 last year, applied to owners of brand new cars with a list price of over £40,000 (or £50,000 for electric vehicles).
Confused.com commented: "Zero-emission cars pay £10 in year one, then move to the £200 standard rate."
The changes mean most drivers will now pay £200 a year for car tax, while those with a car that cost over £40,000 when new could pay up to £640 annually.
