Elderly Drivers Face New VED Car Tax Increases Starting April 2026
Older drivers in the United Kingdom are among those being impacted by upcoming changes to Vehicle Excise Duty (VED) car tax, with price rises set to take effect from April 2026. These adjustments, announced in the Budget 2025 and legislated in Finance Bill 2025-26, will uprate VED rates for cars, vans, and motorcycles in line with the Retail Price Index (RPI) for the 2026 to 2027 period.
Specific Increases for New and Older Vehicles
Owners of brand new petrol and diesel vehicles registered after April 2017 will see significant changes. The first-year VED for the most polluting vehicles will rise from £5,490 to £5,690, marking a £200 increase. Additionally, standard VED fees for cars registered after 2017 will experience a slight uptick from £195 to £200 per annum.
For older vehicles registered before March 1, 2001, the tax rise is smaller but still notable. Larger cars with engines above 1549cc will see their annual fees increase from £360 to £375, an additional £15. Smaller cars in this age range with engines below 1549cc will face a £10 rise, from £220 to £230 per year.
Luxury Car Tax Adjustments and Electric Vehicle Threshold
Cars with a new purchase price exceeding £40,000, including any added features, will attract an additional annual payment of £425, up from £410. This surcharge is payable on top of regular yearly VED motor tax costs from years one to six of ownership. Motorists who spend over £40,000 on a new car, including extras, will encounter this extra £425 levy throughout a five-year stretch, starting when the vehicle is taxed for its second year. By the sixth year, this amounts to an additional £2,125 in taxation.
From April 2026, the threshold for this luxury car tax surcharge has been increased to £50,000 for electric vehicles, while petrol and diesel cars will remain at the £40,000 threshold. This change aims to reflect the evolving automotive market and encourage cleaner transportation options.
How VED is Calculated for Older Vehicles
For drivers of older vehicles registered before March 2001, VED fees are determined using engine capacity bands instead of CO2 emissions. This system continues to apply, ensuring that tax calculations remain consistent for these historic models despite the overall rate increases.
The government's move to adjust VED rates is part of broader fiscal measures to align with inflation and support environmental goals, impacting a wide range of motorists, including the elderly who may rely on their vehicles for daily mobility.
