Chancellor Rachel Reeves has confirmed a £560 charge for drivers of certain cars manufactured and registered after 2017 under new Vehicle Excise Duty (VED) bands. The Labour Party Chancellor announced the increase, which will see motorists paying hundreds of pounds to use the roads this year.
Who is affected by the £560 charge?
Cars made after 2017 that emit between 131 and 150g/km of CO2 will be subject to a first-year tax of £560. This initial fee, known as the 'showroom tax,' applies to vehicles first registered after April 2017, with the rate determined by the car's CO2 emissions. From the second year onward, these vehicles revert to the standard annual VED rate of £200, up from £195 in 2025/26.
Additional charges for expensive cars
Cars with a list price exceeding £40,000 are also hit with an additional annual supplement of £440 for the first five years. For zero-emission electric vehicles (EVs), this threshold rises to £50,000 from 1 April 2026, meaning only EVs above this price pay the supplement.
Standard rates and exemptions
After the first year, most petrol and diesel cars pay £200 annually. Zero-emission cars registered from 1 April 2026 will pay just £10 in year one, then the standard £200 rate. Cars registered between 1 April 2017 and 31 March 2026 also follow the £200 annual rate.
Important reminders from Confused.com
Confused.com warns: "You can't tax your car if you don't have car insurance." When applying for tax, the DVLA checks whether your car has a valid MOT and insurance. Without tax, you risk an £80 fine, which can be reduced to £40 if paid within a certain period, a £1,000 fine if caught driving without tax, and vehicle clamping by the DVLA. Additionally, driving without valid insurance can lead to even tougher measures. If you sell your car and cancel your insurance, you may be eligible for a car tax refund based on remaining months of tax paid.
