Chancellor Rachel Reeves has confirmed a new vehicle tax charge for drivers of older low-emission cars, ending a period where they paid nothing. The change affects vehicles in Band A, which have CO2 emissions of up to 100g/km and were previously exempt from vehicle excise duty (VED).
New Tax Charges for Older Cars
Owners of cars made before 2017 that fall into Band A will now have to pay an annual charge of £20. This marks a significant shift in policy, as these drivers had enjoyed zero-cost motoring under the previous rules. The Treasury, under Reeves, has implemented this measure as part of broader tax reforms.
Impact on Electric Vehicle Owners
The change is part of a wider trend affecting low-emission and electric vehicle (EV) owners. Previously, EV drivers also benefited from paying no vehicle tax. However, under the new rules, owners of newer EVs must now pay the standard rate of £200 per year, aligning them with petrol and diesel car owners.
Andy Wood, a tax expert at Tax Barrister UK, commented: "A lot of drivers still assume road tax is calculated purely on the age of the vehicle, but emissions remain one of the biggest factors in determining how much motorists pay. Even relatively modest differences in CO2 output can place vehicles into entirely different tax bands, which can have a noticeable impact on annual running costs."
He added: "The removal of the zero-rate band for cars emitting under 100g/km has caught some drivers off guard because many had become used to paying nothing at all. While £20 may not sound substantial on its own, it reflects a wider shift towards bringing more vehicles into the VED system regardless of emissions performance."
Drivers affected by the change may receive unexpected tax letters from the DVLA. The new charges apply to vehicles registered before April 2017 that were previously in the zero-rate band. Motorists are advised to check their tax band and prepare for the additional cost.
