New Car Tax Bands Announced for Pre-2001 Petrol and Diesel Vehicles
Significant changes to Vehicle Excise Duty (VED) are set to take effect from April, specifically targeting petrol and diesel cars registered before 2001. The cost of this mandatory tax, commonly known as car tax or road tax, is directly linked to your vehicle and varies based on several key factors including its age, original list price, and official CO2 emissions.
Understanding the Updated Tax Bands
The different rates, referred to as car tax bands, VED bands, or road tax bands, determine how much owners must pay annually. For vehicles first registered before 1 March 2001, the tax amount is primarily calculated according to engine size. Recent budgetary adjustments have introduced a slight increase in these rates, continuing a trend from previous years.
Analysis from motoring expert Pete Barden indicates that VED fees for cars with engines of 1,549cc or below will rise from £220 to £230, marking a £10 increase. This follows a similar £10 hike implemented last year, when bills increased from £210 to £220 in April 2025.
Increased Costs for Higher-Powered Vehicles
Owners of higher-powered vehicles will also face elevated costs, with annual prices set to climb from £360 to £375. This £15 increase mirrors the rise seen in 2025, when costs went up from £345 to £360. Despite these adjustments, the structure of the increases remains consistent with recent patterns.
It is important to note that cars over 40 years old are exempt from VED payments. Specifically, all vehicles built before 31 March 1980 have been tax-exempt since 1 April 2020, though they must still be properly registered with the DVLA to remain legal on the road.
Essential Information from the AA
The AA has issued a reminder about the fundamentals of car tax, stating: "There are a few basics that it’s helpful to understand about car tax. You must tax your car if your vehicle is registered in the UK and is used on public roads, unless you are exempt due to a disability."
Vehicle tax costs are determined by:
- The age of your vehicle
- Engine size
- Official CO2 emissions, as recorded on the V5c registration document from pre-sale tests
Since April 2017, the car’s list price when new has also been a factor in calculating VED. The AA warns that failing to tax your vehicle can result in an £80 fine, which is reduced by half if paid within 28 days. Even if your car qualifies for a £0 tax rate, you must still re-tax it annually to avoid penalties.
