Chancellor Rachel Reeves has overseen 22 separate Vehicle Excise Duty (VED) band increases since April 2026, resulting in hundreds of pounds in additional annual costs for motorists driving petrol and diesel cars. The changes affect both new vehicles and those registered between 2001 and 2017, with tax bands adjusted across the board.
First-Year Tax Rates for New Cars Rise Sharply
New cars are subject to first-year VED fees based on CO2 emissions, with the most polluting vehicles now facing the steepest increases. Cars emitting over 255g/km of CO2 now pay £5,690 per year, a £200 rise from the previous £5,490. Vehicles in the 226-255g/km band are charged £4,850, up £170 from last year. Slightly cleaner models in the 191-225g/km bracket see a £120 increase to £3,420, while those emitting 171-190g/km rise by £80 to £2,270.
For cars between 151-170g/km, the first-year rate increases by £50 to £1,410. Models in the 131-150g/km band rise £20 to £560, and those in 111-130g/km go up £15 to £455. The 101-110g/km and 91-100g/km bands each increase by £15, to £405 and £365 respectively. Cars emitting 76-90g/km see a £10 rise to £280, while 51-75g/km models increase £5 to £135. Vehicles with 1-50g/km emissions rise £5 to £115, and zero-emission cars remain at £10 with no change.
Older Cars (2001-2017) Also Hit with Higher Charges
Cars registered between 2001 and 2017 are affected by annual VED increases. The most polluting models in Band M (over 255g/km) now cost £790 per year, up £30 from £760. Band L vehicles (226-255g/km) rise £25 to £760, while Band K (201-225g/km) increases £15 to £445. Band J (186-200g/km) and Band I (176-185g/km) each rise £15, to £410 and £360 respectively. Band H (166-175g/km) goes up £10 to £325, Band G (151-165g/km) rises £10 to £275, and Band F (141-150g/km) increases £10 to £225. Band E (131-140g/km) and Band D (121-130g/km) each rise £5, to £200 and £170. Bands A, B, and C remain unchanged at £20, £20, and £35 respectively.
Impact on Motorists and Exemptions
After the first year, new cars revert to the standard annual rate of £200 from the second year onward. However, the increased first-year rates significantly raise the upfront cost of purchasing a new, higher-emission vehicle. According to the Chancellor's updates, the changes are part of broader fiscal measures to align vehicle taxation with environmental goals.
Motorists driving more than 10,000 miles annually may also face additional charges, with a 25p per mile fee introduced from July 1, 2026, as confirmed by Motability. These cumulative increases have sparked criticism from driver groups, who argue that the tax burden disproportionately affects those reliant on older, less efficient vehicles.
