New Vehicle Excise Duty (VED) car tax bands have been confirmed, with fees rising from April 2027. The Treasury announced the increases following John Healey's Autumn Budget statement, and the changes will affect nearly every petrol, diesel and electric car owner.
VED rises every 12 months in line with Retail Price Index (RPI) inflation, so increases were expected. The news is set to be a blow to cash-strapped road users already battling the cost of living crisis.
Band L and Band M increases
Experts at Pete Barden are working out what the changes mean. The standard VED charge for all cars registered after 2017 is tipped to increase from £200 per year to £210, a £10 rise.
Owners of older vehicles registered between 2001 and 2017 are among the most affected. These drivers are placed into one of 13 tax bands depending on their overall vehicle emissions.
Band M vehicles emitting over 255g/km of CO2 will pay the most, with bills expected to rise from £790 to £825 next year, a £35 increase.
Band L drivers face £795 fee
Cars in the next band down are also impacted. Vehicles emitting between 226 and 255g/km are placed into Band L and should pay £795 per year from April 2027, a £35 increase on the current £760 charge.
This is a slightly higher increase than last year, when overall fees rose from £735 to £760 per year. Drivers in this tax band paid just £710 to use the roads between 2024/25, with costs as low as £675 over 2023/24.
The Treasury previously said: “The government will uprate VED rates for cars, vans and motorcycles in line with the Retail Prices Index (RPI) from 1 April 2027.”
