Rachel Reeves has confirmed a £375 charge for drivers with certain older cars parked on driveways, just before her anticipated exit as Chancellor. The Labour Party Chancellor is widely expected to be replaced in Number 11 Downing Street by incoming Prime Minister Andy Burnham, with reports suggesting Birmingham MP Shabana Mahmood could succeed her.
VED Uprating and Bands
Ahead of her departure, Reeves has uprated Vehicle Excise Duty (VED) for the next 12 months. The new bands mean that some cars registered between 1986 and 2001 face charges of up to £375 at the top end. Specifically, cars above 1549cc now pay £375 per year in VED fees.
The RAC explains: "VED road tax rates for cars first registered after March 2001 and before April 2017 are split across 13 bands depending on the CO2 emissions of the vehicle. In basic terms, the lower the CO2, the lower the tax band."
Changes Since 2025
Since 2025 VED rule changes, cars with CO2 emissions below 100g/km no longer qualify for free road tax. This means owners now have to pay £20 a year for VED if their car emits up to 100g/km of CO2. The RAC adds: "Road tax for petrol and diesel cars registered after March 2001 and before April 2017 are broadly the same."
Exemptions
A number of vehicles are currently exempt from paying VED. These include vehicles used by people in receipt of the enhanced mobility element of Personal Independence Payment (PIP). Vehicles used by organisations that provide transport for disabled people are also exempt, as well as vehicles made 40 years ago or more ("historic vehicles"), known as the 'classic car exemption'. Vehicles with a maximum road speed of 8mph, and fitted with a device limiting the speed to 4mph on footways, are exempt too, alongside mowing machines and steam-powered vehicles. Vehicles used for agriculture, horticulture and forestry (such as tractors) complete the list, along with vehicles with a Statutory Off Road Notification (SORN) that are only used off public roads.
