Rachel Reeves has confirmed a new £35 charge for drivers, as the Labour Party Chancellor announced Vehicle Excise Duty (VED) rate rises for the forthcoming tax year. The changes are already in effect from April 2026.
New VED Bands and Charges
Under the 13 new bands for drivers, those in band C, covering cars emitting between 111 and 120g/km of CO2, will pay £35 in VED. VED road tax rates for cars first registered after March 2001 and before April 2017 are split across 13 bands depending on the vehicle's CO2 emissions. In basic terms, the lower the CO2, the lower the tax band.
Since 2025 VED rule changes, cars with CO2 emissions below 100g/km no longer qualify for free road tax. This means you now have to pay £20 a year for VED if your car emits up to 100g/km of CO2.
Official Statement from HMRC
HMRC stated: "As announced at Budget 2025, the Government will introduce legislation in Finance Bill 2025-26 to uprate Vehicle Excise Duty rates for cars, vans and motorcycles in line with the Retail Price Index (RPI) for 2026 to 2027. This will take effect from 1 April 2026."
Penalties for Non-Payment
Warning motorists who don't pay their road tax, the RAC said: "The penalty increases to £2,500 if you’re caught using or keeping an untaxed vehicle on a public road with a SORN in place." In both cases, the vehicle might be clamped, and a £100 clamp release fee will be payable within the first 24 hours. If the vehicle is removed, the fee increases to £200, along with a £21 per day storage fee beginning once the vehicle has been removed to the vehicle pound.
Driving without car tax can lead to serious consequences, with a fine up to £1000. Now that the disc is no longer in use, the police use a network of Automatic Number Plate Recognition (ANPR) cameras to check if a car is taxed. If a car that is not taxed is abandoned, the vehicle is stored for a period between 7 and 14 days, at which point it might be disposed of at auction, broken for spares, or crushed. You need to make a SORN when you take a vehicle off the road and you want to stop taxing and insuring it.
