Drivers across the UK are being warned to prepare for an increase in their annual vehicle tax payments, with new rates expected to be confirmed by the Government imminently. The standard rate of vehicle excise duty (VED) is anticipated to rise, impacting millions of motorists from April 2026 onwards.
Expected Increase in Vehicle Excise Duty
It is projected that the majority of drivers will need to budget for a £200 charge to tax their vehicle for a full twelve-month period. This represents a £5 increase from the current rate of £195, which applies to most cars registered after 2017. The adjustment is understood to be in line with the Retail Price Index (RPI), a measure of inflation.
Motoring organisation the RAC has commented on the forthcoming changes. A spokesperson stated: "While the car tax rates for April 2026 onwards have yet to be officially released, we're expecting the cost of VED in 2026 to be £200 for most newer car drivers - up from £195. This rises in line with the Retail Price Index."
Additional Charges for High-Value Vehicles
Owners of more expensive cars could face a significantly larger financial burden. If a vehicle had an original list price exceeding £40,000 when first sold (or £50,000 for electric models), an additional 'luxury car tax' fee of £425 applies. This supplementary charge would bring the total annual VED cost for such vehicles to £620.
The exact amount each driver pays is determined by several factors:
- The year the car was first registered.
- The type of fuel the vehicle uses.
- The official tailpipe emissions of the model.
It is important to note that vehicles first used before 2017 are subject to different tax bands, meaning some drivers may pay less or more than the new standard rate.
Impact on Electric Vehicle Owners
The tax rise delivers another financial setback for owners of electric vehicles (EVs). This cohort was required to pay VED for the first time only last year, marking the end of an era of free road tax for zero-emission cars.
From April 2026, EV drivers will begin paying the same £200 annual flat rate as other motorists with newer vehicles. Furthermore, the Government has announced plans to introduce a new pay-per-mile tax system specifically for electric vehicles, scheduled to commence in 2028.
This series of changes signifies a major shift in the taxation landscape for environmentally friendly transport, aligning the costs for EV owners more closely with those of traditional petrol and diesel vehicle drivers.
