Motorists across the United Kingdom are being urged to prepare for substantial changes to Vehicle Excise Duty (VED), with officials confirming a comprehensive overhaul of road tax bands set to take effect from April 2026. The new structure introduces 13 distinct tax bands, with drivers of the most polluting vehicles facing an annual charge of up to £790, marking a significant financial impact for many households.
Detailed Breakdown of the 2026-2027 Tax Bands
The confirmed rates reveal a tiered approach based on CO2 emissions for vehicles registered between March 1, 2001, and April 1, 2017. While lower-emission categories remain stable, higher bands see notable increases. For instance, vehicles emitting between 121 and 130g/km will rise from £165 to £170, while those in the 141-150g/km bracket jump from £215 to £225. The most dramatic hike affects cars emitting over 255g/km, with their annual tax soaring from £750 to £790.
Impact on Modern Vehicles
For the majority of drivers operating petrol or diesel cars registered after April 2017, the standard annual VED rate will increase by a modest £5, moving from £195 to £200. This adjustment is directly linked to the Retail Price Index (RPI) update announced in the 2025 Autumn Budget. However, the financial burden escalates considerably for purchasers of brand-new, high-emission vehicles. The first-year 'showroom tax' for the most polluting models will surge by £200, from £5,490 to £5,690.
Additionally, the Expensive Car Supplement, which adds £425 yearly for five years on new cars priced over £40,000, has been modified. The threshold for electric vehicles has been raised to £50,000, providing some relief for EV buyers within this price range.
Electric Vehicles Face New Charges
The landscape for electric vehicle taxation is evolving rapidly. From April 2025, electric cars are subject to VED for the first time, paying the standard rate and potentially the expensive car supplement if above the new threshold. Furthermore, a groundbreaking 'mileage tax' is scheduled for introduction in April 2028. This policy will charge battery electric car drivers an equivalent of 3p per mile and plug-in hybrid owners £0.015 per mile, intended to support road maintenance as fuel duty revenue declines.
Industry experts have expressed concerns about these developments. John Cassidy, Sales Managing Director at Close Brothers Motor Finance, commented: "A pay-by-mile scheme for electric vehicles risks increasing costs for many drivers, particularly those who rely on their cars for higher annual mileage. With energy bills rising and public charging becoming more expensive, motorists will fear that EV ownership could end up being significantly more expensive than traditional ownership." This new charge could add approximately £300 per 10,000 miles driven in an EV, with prices set to increase annually in line with the Consumer Price Index.
Historical Vehicles and Exemptions
Amidst these widespread changes, certain categories remain protected. The classic car 40-year tax exemption continues unchanged, meaning vehicles built over four decades ago still qualify as 'historic' and pay £0 in VED. Similarly, road tax exemptions for disabled drivers remain firmly in place, ensuring those eligible are shielded from these financial increases.
For older vehicles registered before March 2001, taxation continues to be based on engine size rather than CO2 emissions, with specific rates adjusted under the new framework.
Broader Context and Treasury Motivations
These adjustments follow significant reforms to the VED system introduced on April 1, 2017, which replaced the CO2-based bands with zero, standard, and premium categories. The changes were a direct response to falling emissions levels that had led to many motorists paying minimal or no road tax, resulting in substantial revenue losses for the Treasury. The latest updates aim to recalibrate the system to reflect contemporary environmental and fiscal priorities.
As the April 2026 implementation date approaches, drivers are advised to review their vehicle's tax band and budget accordingly for the impending increases, which promise to reshape the cost of motoring in the UK for years to come.
