Andy Burnham will oversee new Vehicle Excise Duty (VED) car tax increases from April 1, 2027, with fees for certain vehicles set to rise to £375 per year.
Treasury Confirms RPI-Linked Rise
The Treasury confirmed in a document published shortly after the Autumn Budget that VED costs would increase next spring. VED is typically tied to Retail Price Index (RPI) inflation, with annual increases every April now a formality.
The Treasury said: “The government will uprate VED rates for cars, vans and motorcycles in line with the Retail Prices Index (RPI) from 1 April 2027.”
Band I Motorists Face £15 Increase
Cars registered between 2001 and 2017 are placed into one of 13 VED tax bands, with rates dependent on the age of a vehicle and its emissions. Motorists in Band I, for cars emitting between 176 and 185g/km of CO2, are among those affected. These vehicles typically include mid-to-large family SUVs, crossovers, executive saloons, estates, large people carriers, and some performance models.
Specialists at Pete Barden have predicted Band I fees will rise to £375 from April 1, a £15 increase on the current £360 charge. This follows a £15 jump in April 2026, when bills increased from £345 per annum.
Historical Rate Increases
In the 2024/25 tax year, Band I rates stood at £335 per year, up from £320 paid between 2023 and 2024 and £290 in 2022/23.
The new rates could affect motorists already facing rising fuel prices, with petrol and diesel costs soaring in 2026.
