Millions of drivers across the United Kingdom are set to face another financial blow as vehicle excise duty (VED) is poised to increase from April 2026. This latest rise adds to the ongoing cost-of-living pressures affecting motorists nationwide.
Details of the Vehicle Tax Increase
The Government is widely expected to implement a hike in vehicle tax for the 2026/27 financial year. Most drivers will see their annual VED payment rise to £200, representing a £5 increase from the current rate of £195. This adjustment primarily affects cars registered after 2017.
Impact on Different Vehicle Types
This increase follows a similar rise implemented last year and continues a trend of growing motoring expenses. Notably, electric vehicle (EV) owners, who previously enjoyed exemption from road tax, will now be subject to the same £200 flat rate as other drivers.
Rhydian Jones, a car insurance expert at Confused.com, commented: "From April, most drivers will see their car tax increase as part of the changes announced in the autumn Budget. The standard rate for many cars will rise, which means almost all petrol, diesel and electric vehicle owners will be paying more to keep their car taxed."
Additional Costs for Luxury Vehicles
The RAC motoring organisation has provided further clarification regarding additional charges. Vehicles with an original list price exceeding £40,000 (or £50,000 for electric cars) may be subject to an extra 'luxury car tax' fee of £425. This supplementary charge would bring the total annual VED cost for such vehicles to £620.
The RAC stated: "While the car tax rates for April 2026 onwards have yet to be 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 (RPI)."
How Vehicle Tax is Calculated
The exact amount each driver pays depends on several factors:
- The year the vehicle was first registered
- The type of fuel the vehicle uses
- The tailpipe emissions of the vehicle
Drivers of vehicles first used before 2017 may pay different rates, as the tax bands vary for older models. The RAC added: "You may pay less or more if your car was first used before 2017."
Broader Context of Motoring Costs
This tax increase arrives at a challenging time for drivers, with numerous other motoring expenses also projected to rise throughout the year. Jones further explained: "These increases will affect drivers across the country, so it's important to know what you will be expected to pay before your renewal date arrives. At a time when many other motoring costs are also set to rise this year, these new rates may come as unwelcome news for some drivers."
The standard rate increase means that most petrol, diesel, and electric car owners paying the standard rate will see their annual bill rise from approximately £195 to £200 under the new regulations.
