Millions of UK Drivers Face £200 Vehicle Tax Increase from April 2026
Motorists across the United Kingdom are bracing for another significant financial burden as the Government prepares to implement a vehicle tax hike for the second year running. This latest increase will see millions of drivers required to pay £200 to tax their vehicles for a twelve-month period, marking a £5 rise from the current rate of £195.
Details of the Proposed Tax Changes
The new £200 rate is expected to apply to the majority of newer cars registered after 2017, with the increase scheduled to come into effect from April 2026. This adjustment aligns with the Retail Price Index (RPI), reflecting ongoing inflationary pressures that continue to impact household budgets.
For drivers of vehicles that originally had a list price exceeding £40,000 when first sold, or £50,000 for electric models, an additional luxury car tax fee of £425 will apply. This supplementary charge brings the total annual Vehicle Excise Duty (VED) cost up to £620 for affected motorists.
Impact on Electric Vehicle Owners
Electric vehicle owners, who until recently enjoyed exemption from road tax charges, will face particular financial implications from these changes. From April 2026, EV drivers will begin paying the standard £200 annual flat rate, marking a significant policy shift that removes previous incentives for zero-emission vehicles.
Furthermore, the Government has announced plans to introduce a pay-per-mile tax system from 2028, which will specifically target electric vehicle owners as part of broader transportation funding reforms.
How Vehicle Tax is Calculated
The exact amount drivers will pay depends on several key factors:
- The year the vehicle was first registered
- The type of fuel the vehicle uses
- The tailpipe emissions of the vehicle
- Whether the vehicle qualifies for luxury car tax
For vehicles first used before 2017, different tax bands apply, meaning some drivers may pay less than the standard £200 rate while others could face higher charges based on their vehicle's specifications and environmental impact.
Industry Response and Future Outlook
Motoring organisation the RAC has commented on the anticipated changes, noting that while official rates for April 2026 onwards have yet to be formally released, the £200 figure represents a logical progression based on current economic indicators and government policy direction.
This tax increase represents the latest in a series of rising costs for UK motorists, who must now factor in this additional expense alongside fuel prices, insurance premiums, and maintenance costs when budgeting for vehicle ownership.
