New VED Car Tax Bands Implemented with Drivers Facing Annual Charges Up to £5,690
New Vehicle Excise Duty (VED) car tax bands have taken effect from April 1, 2026, imposing significant financial burdens on motorists across the country. Road users are now contending with annual inflationary rises that have substantially increased the cost of vehicle ownership.
Substantial Increases for High-Polluting Vehicles
Owners of brand-new, highly polluting models emitting over 255g/km of CO2 have been particularly hard hit. Their annual bills have risen by £200, bringing total costs to a staggering £5,690 per year. This represents one of the most substantial increases in recent automotive taxation history.
The new 2026/27 fee structure was detailed in HMRC's rates and allowances report published last December. As HMRC previously stated: "As announced at Budget 2025, the Government will introduce legislation in Finance Bill 2025-26 to uprate Vehicle Excise Duty rates for cars, vans and motorcycles in line with the Retail Price Index (RPI) for 2026 to 2027. This will take effect from 1 April 2026."
Differential Rates Across Vehicle Types
During the first year of registration, electric vehicles will continue to benefit from the lowest first-year rate, currently set at £10. However, internal combustion engine (ICE) and hybrid vehicles face a much broader range of charges.
- ICE and hybrid cars will pay rates between £115 and £5,690 annually, depending on their specific emissions levels
- Vans will pay the standard rate, which increased to £360 in April 2026
- After the first year, vehicles will be charged the standard rate on their registration anniversary
For the 2026/27 tax year, the standard rate has risen to £200 for cars and £360 for vans, with both figures scheduled to increase annually in line with inflation.
Changes to Expensive Car Supplement Thresholds
Significant adjustments have been made to the Expensive Car Supplement system. From April 2026, the list price threshold for new electric vehicles to trigger this supplement has increased from £40,000 to £50,000.
The supplement, payable during years two through six of vehicle ownership, represents an additional charge beyond the standard VED rate. For the 2026/27 period, this supplement has risen to £440 per year, up from the previous £425.
Meanwhile, the threshold for ICE and hybrid vehicles remains unchanged at £40,000. All new vans, including electric models, will now pay £360 annually, representing a £15 increase from previous rates.
As Ayvens explains: "If you have any questions about how the new VED rates may affect your current or future vehicle choice, we're here to help you navigate the changes with confidence." This guidance highlights the complexity of the new system and the need for motorists to carefully consider their vehicle choices in light of these substantial tax increases.
