Significant Car Tax Changes Approaching for UK Motorists
If you've been monitoring your household expenses recently, there's important news that should prompt you to review your vehicle documentation carefully. Major adjustments to car taxation are on the horizon for the majority of British drivers, with increases scheduled to take effect in the coming years.
Vehicle Excise Duty Increases from April 2026
Motorists across the United Kingdom are being alerted that new car tax rates are "not far away" for the "vast majority" of vehicle owners. The upcoming changes will see Vehicle Excise Duty (VED) rates rise across multiple emission bands, particularly affecting higher-polluting vehicles.
Cars emitting more than 225 grams of CO2 per kilometre currently face substantial VED charges:
- Vehicles producing 201-225g/km: £430 annually
- Vehicles producing 226-255g/km: £735 annually
- Vehicles producing over 255g/km: £750 annually
From April 2026, these bands are set to increase significantly:
- The £735 rate will rise to £760
- The £750 rate for vehicles over 255g/km will increase to £790
Standard Rate Increases for Most Drivers
For the average car owner, the standard annual VED rate will increase by £5, moving from £195 to £200. This adjustment applies to most petrol and diesel vehicles registered after April 2017 and is directly linked to the Retail Price Index (RPI) car tax update announced in the 2025 Autumn Budget.
While a five-pound increase might appear manageable initially, the financial impact becomes more substantial when considering brand-new vehicles or older high-emission models. For those purchasing new cars, first-year car tax rates for petrol and diesel vehicles will see significant jumps—reaching as much as £200 for the highest-emitting vehicles.
New Electric Vehicle Taxation System
Looking further ahead, electric cars and plug-in hybrids will face a completely new taxation structure from April 2028. The government is introducing Electric Vehicle Excise Duty (eVED), which will implement charges based on mileage rather than a flat annual rate.
Under the new eVED system:
- Electric vehicles will incur a 3p charge per mile driven
- Plug-in hybrids will pay 1.5p per mile
- Both rates will increase annually in line with inflation
The eVED charge is designed to be approximately half the fuel duty paid by petrol car drivers and will be applied in addition to the standard VED, currently set at £195 per year. Mileage verification will occur annually, typically during MOT tests, with the payment system integrated into the existing VED framework.
These comprehensive changes represent a significant shift in how vehicles are taxed in the United Kingdom, affecting drivers across all vehicle types and emission categories. Motorists are advised to stay informed about these developments and consider how they might impact their motoring costs in the coming years.
