Chancellor Rachel Reeves has confirmed a significant increase in Vehicle Excise Duty (VED) for certain drivers, with a non-negotiable charge of £5,690 set to apply from April 1, 2026. This change, announced by the Labour Party Chancellor, will impact dozens of vehicles that require a Vehicle Excise Licence to be driven on UK roads.
Standard Tax Rate Increase
From April 2026, HM Treasury has confirmed that the standard tax rate for all petrol, diesel, or hybrid cars registered after April 1, 2017, will rise to £200. Additionally, electric cars under one year old will also be subject to a flat rate of £200 per year. The exact fee depends on the vehicle's first registration year, fuel type, and CO2 emissions.
First Tax Payment on Registration
The first tax payment when registering a vehicle varies by CO2 emissions and fuel type. For example, cars emitting 0g/km pay £10, while those over 255g/km face a charge of £5,690. The table below outlines the costs for different emission bands:
- 0g/km: £10 (petrol/diesel RDE2) or £10 (all other diesel)
- 1-50g/km: £115/£135
- 51-75g/km: £135/£280
- 76-90g/km: £280/£365
- 91-100g/km: £365/£405
- 101-110g/km: £405/£455
- 111-130g/km: £455/£560
- 131-150g/km: £560/£1,410
- 151-170g/km: £1,410/£2,270
- 171-190g/km: £2,270/£3,420
- 191-225g/km: £3,420/£4,850
- 226-255g/km: £4,850/£5,690
- Over 255g/km: £5,690/£5,690
Additional Luxury Car Tax
Vehicles with a list price exceeding £40,000 (or £50,000 for electric cars) may also be liable for the 'luxury car tax', which adds an extra £440 to annual VED costs, bringing the total to £640. The RAC explains that from April 2026, the standard rate for cars registered after April 2017 rises to £200, with six-monthly payments costing £110 or £105 via direct debit, and monthly instalments totalling £210.
Drivers of older vehicles (first used before 2017) may pay less or more depending on their car's specifics. Electric cars no longer qualify for free road tax, and from April 2026, those under one year old will pay the £200 flat rate.
