Drivers of petrol and diesel cars across the UK are set to be hit with a significant increase in their annual vehicle tax from next year. Motoring journalist and expert Pete Barden has revealed that drivers face across-the-board rises starting in April 2026.
The Specifics of the Vehicle Excise Duty Increase
According to the analysis, the standard annual VED rate will rise from £195 to £200. However, the most substantial increases will be felt in the first-year rates, which are linked directly to a vehicle's CO2 emissions. These first-year charges are set to jump by £5 to £200 higher than current levels.
For the highest-polluting vehicles, the financial impact will be severe. Pete Barden states that the first-year VED fee for cars emitting over 255g/km of CO2 will soar to £5,690 in 2026, a sharp rise from the current charge of £5,490.
Why Are VED Rates Going Up?
Pete Barden explained the multifaceted reasoning behind the Chancellor's decision. "The Chancellor combines various elements from inflation to roads policy and vehicle emissions when deciding how much to increase the amount drivers pay for VED - or road tax as most know it," he said.
The key considerations influencing the hike include:
- Vehicle Emissions: The UK's VED system is intrinsically linked to CO2 output. The goal is to incentivise the use of greener vehicles by placing lower-emission cars in cheaper tax bands and penalising high-polluting models with higher rates.
- Inflation: Rates are periodically adjusted to account for inflation, often in line with the Retail Price Index (RPI), to maintain their real value over time.
- Budgetary Needs: Changes can be driven by the government's broader fiscal requirements, with adjustments made to generate additional revenue.
- Public Policy Goals: VED is a tool used to support objectives like reducing air pollution and accelerating the shift to electric and low-emission vehicles.
What This Means for UK Motorists
The announced changes underscore the government's continued use of tax policy to steer consumer behaviour towards more environmentally friendly transport options. While the standard rate increase of £5 may seem modest, the steep rises for new, high-emission vehicles are designed as a strong deterrent.
All changes to Vehicle Excise Duty rates are typically formally announced by the Chancellor of the Exchequer during the annual budget speech and are then subject to parliamentary approval. For drivers, this planned hike from April 2026 signals a clear intent to make running traditional internal combustion engine cars increasingly expensive, particularly at the point of purchase.
