Upcoming changes to Vehicle Excise Duty (VED) rates will take effect in April, impacting owners of many popular vehicles in the UK with significant tax increases. A total of 59 models from 24 manufacturers, including prominent names like Ford, BMW, and Mercedes, will incur a £5,690 annual fee starting April 1.
Understanding Vehicle Excise Duty
Vehicle Excise Duty, commonly referred to as road tax or car tax, is an annual levy required for operating cars, vans, motorcycles, and other vehicles on UK public roads. The Driver and Vehicle Licensing Agency (DVLA) collects approximately £5 billion in VED revenue each year, though this funding supports various public services, including education and healthcare, rather than exclusively road maintenance and infrastructure.
Rates adjust annually to align with inflation. The standard VED rate currently stands at £195, but for cars registered after 2017, this will increase to £200 per year from April. Owners of new combustion-engine vehicles face the steepest rises, particularly those models emitting more than 255g/km of CO2.
Key Changes for New and Existing Vehicles
Drivers of brand-new cars producing over 255g/km of CO2 will pay £5,690 in the first year, a jump from the previous £5,490. These adjustments follow major revisions to VED rates introduced last year, which resulted in increases of up to £2,745 for certain high-emission models.
Vehicles registered between 2001 and 2017 also see updates based on emission bands. Models in Band M, which exceed 255g/km of CO2, will face a rise from £760 to £790 annually.
Exemptions and Special Cases
Certain vehicles qualify for exemptions, such as those used by disabled drivers. These provisions ensure that specific groups avoid the full tax burden.
Government Announcement on Future Adjustments
HM Revenue and Customs (HMRC) confirmed the rate increases late last year, following the Autumn Budget. Officials 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 April 1, 2026.”
