Britain’s drivers encounter higher vehicle taxes under Chancellor Rachel Reeves, even as fuel costs climb amid global tensions. Vehicle excise duty increases by £5 for most cars registered after April 1, 2017, affecting petrol, diesel, hybrid, and electric models. The precise increase varies by vehicle type, registration date, and CO2 emissions.
Breakdown of New Tax Rates
A typical new petrol car emitting around 143g/km of CO2 faces a first-year tax of £560. Diesel equivalents average £1,360 in the first year. Vehicles producing over 255g/km of CO2 now incur a £5,690 first-year rate, marking a £200 rise.
Historical Background
Vehicle tax originated in Great Britain in 1889 through the Customs and Inland Revenue Act 1888. In 1909, the Development and Road Improvement Funds Act tied it to road maintenance. Today, revenue no longer funds roads directly and focuses on environmental impact instead.
Criticisms and Structure
Critics argue the tax fails to address motoring’s external costs like road wear and pollution, as rates apply uniformly regardless of usage. Owners pay upon first registration for 12 months, followed by renewals every six or 12 months based on CO2 emissions.
Expensive Vehicle Supplement
Vehicles with a list price exceeding £40,000 for petrol or diesel models—or £50,000 for electrics—incur an additional £440 annually. This supplement applies to electric vehicles registered between April 1, 2025, and March 31, 2026. Zero-emission vehicles registered before April 1, 2025, qualify for exemption.
