Chancellor Rachel Reeves has confirmed that most drivers in the UK will face an annual charge of £200 for car tax, officially known as Vehicle Excise Duty (VED). The Labour government has committed to increasing car tax for the 2026 to 2027 tax year, with new rates from HM Treasury now in effect.
The announcement was made during the Autumn Statement in November, where Reeves outlined the changes. For cars registered after April 2017, the first-year tax depends on CO2 emissions, followed by a standard rate of £200 from year two onwards, effective from 1 April 2026.
First-Year VED Rates
For first-time payers, the first-year VED rates are as follows:
- Band A: 0g/km CO2 – £10
- Band B: 1-50g/km CO2 – £115
- Band C: 51-75g/km CO2 – £135
- Band D: 76-90g/km CO2 – £280
- Band E: 91-100g/km CO2 – £365
- Band F: 101-110g/km CO2 – £405
- Band G: 111-130g/km CO2 – £455
- Band H: 131-150g/km CO2 – £560
- Band I: 151-170g/km CO2 – £1,410
- Band J: 171-190g/km CO2 – £2,270
- Band K: 191-225g/km CO2 – £3,420
- Band L: 226-255g/km CO2 – £4,850
- Band M: Over 255g/km CO2 – £5,690
Impact on Diesel and Electric Vehicles
Confused.com states that most cars on UK roads are affected. Auto Trader notes that diesel cars not meeting Real Driving Emissions 2 (RDE2) standards will pay higher first-year VED, falling into a higher band. For example, diesel cars with over 226g/km CO2 will pay £5,690. Cinch explains that electric cars, previously exempt, must pay the £200 standard rate from 1 April 2026.
