Drivers of cars manufactured before 2017 could face significantly higher vehicle tax bills under the latest rates announced by Chancellor Rachel Reeves for 2026/27. Depending on the model, annual charges range from £20 to as much as £790, with a key threshold of £325 for vehicles in emissions band H (166 to 175g/km of CO2).
How Emissions Bands Determine Tax
Vehicle tax is calculated based on CO2 emissions, with bands from A to M. Most cars fall between bands A and H. For example, band H (166-175g/km) incurs a £325 charge. Cleaner vehicles emitting under 100g/km, previously exempt, now must pay £20 per year.
Andy Wood, tax expert at Tax Barrister UK, said: “A lot of drivers still assume road tax is calculated purely on the age of the vehicle, but emissions remain one of the biggest factors in determining how much motorists pay. Even relatively modest differences in CO2 output can place vehicles into entirely different tax bands, which can have a noticeable impact on annual running costs.”
Impact on Older Car Owners
Older cars typically produce higher emissions, making them more likely to fall into expensive bands. The removal of the zero-rate band for sub-100g/km vehicles has surprised some drivers. Wood added: “The removal of the zero-rate band for cars emitting under 100g/km has caught some drivers off guard because many had become used to paying nothing at all.”
Motorists are advised to research emissions ratings before purchasing an older model to avoid unexpected tax bills. The Treasury has set these rates for the 2026/27 financial year.
