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 major brands like Ford, BMW, and Mercedes, will face a £5,690 annual fee starting April 1.
Background on Vehicle Excise Duty Changes
These adjustments follow major updates to VED rates introduced last year, which resulted in hikes of up to £2,745 for certain models. VED, commonly referred to as car tax or road tax, is an annual levy required for operating cars, vans, motorcycles, or other vehicles on UK public roads. The Driver and Vehicle Licensing Agency (DVLA) gathers approximately £5 billion in VED revenue each year, though this funding supports a range of public services beyond just road maintenance and infrastructure.
Rates adjust annually to account for inflation, with the current standard rate set at £195. This tax contributes to the general pool of government revenues, potentially funding areas like education and healthcare alongside transportation.
Details of the Tax Increases
For vehicles registered after 2017, the standard annual VED fee will increase from £195 to £200 starting in April. Owners of newly registered combustion-engine cars producing more than 255g/km of CO2 emissions will see the sharpest rise, with first-year rates climbing to £5,690 from the previous £5,490.
Older vehicles registered between 2001 and 2017 will also experience changes based on a sliding scale tied to emissions. Models in the highest band M, exceeding 255g/km of CO2, will pay £790 annually, up from £760.
Exemptions and Special Cases
Certain vehicle users, such as those with disabilities, qualify for exemptions from VED charges. These provisions help ensure accessibility for eligible motorists.
Government Announcement on Rate Adjustments
Government officials confirmed the updates toward the end of last year, following the Autumn Budget. They 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.”
