New Car Tax Rates Confirmed for Post-2001 Vehicles
The government has confirmed new car tax and Vehicle Excise Duty (VED) rates for drivers over the next 12 months, following the Budget 2025 announcement. The Labour Party government introduced legislation in Finance Bill 2025-26 to uprate VED rates for cars, vans and motorcycles in line with the Retail Price Index (RPI) for 2026 to 2027.
Additionally, the legislation uprates VED for Heavy Goods Vehicles (HGVs) in line with RPI for 2026 to 2027, and increases the HGV levy similarly. A key change is the adjustment of the Vehicle Excise Duty Expensive Car Supplement threshold from £40,000 to £50,000 for zero-emission vehicles (ZEVs), effective from 1 April 2026 and applying to ZEVs registered from 1 April 2025 onwards.
Impact on Petrol and Diesel Cars Registered Between 2001 and 2017
Under the changes, petrol and diesel cars registered between 2001 and 2017 face new car tax charges. VED fees increased in April in line with inflation, with drivers paying between £5 and £30 more depending on their vehicle's CO2 emissions.
The full list of VED rates for cars registered from 2001 to 2017 is as follows:
- Band A (up to 100g/km): £20 – no change
- Band B (101-110g/km): £20 – no change
- Band C (111-120g/km): £35 – no change
- Band D (121-130g/km): £170 – £5 increase
- Band E (131-140g/km): £200 – £5 increase
- Band F (141-150g/km): £225 – £10 increase
- Band G (151-165g/km): £275 – £10 increase
- Band H (166-175g/km): £325 – £10 increase
- Band I (176-185g/km): £360 – £15 increase
- Band J (186-200g/km): £410 – £15 increase
- Band K (201-225g/km): £445 – £15 increase
- Band L (226-255g/km): £760 – £25 increase
- Band M (over 256g/km): £790 – £30 increase
Broader Implications for Drivers
These changes affect millions of drivers across the UK. The government's decision to uprate VED in line with RPI ensures that tax rates keep pace with inflation, but it also means higher costs for motorists, particularly those with higher-emission vehicles. The expensive car supplement threshold increase for ZEVs is designed to incentivize the transition to cleaner vehicles.
