Vehicle Excise Duty (VED) car tax rates will increase from April 2027, with the most polluting vehicles set to pay £825 a year. The Treasury has confirmed that VED charges will be uprated in line with Retail Price Index (RPI) inflation, continuing the annual pattern of rises.
Standard and first-year rate increases
According to Pete Barden, the standard VED rate for cars registered after 2017 will rise from £200 to £210 per year. First-year VED fees are also set to increase, with bills reaching as high as £5,950 per annum.
Older models registered between 2001 and 2017 are split into one of 13 VED tax bands, calculated based on overall pollution levels. The dirtiest cars, emitting over 255g/km of CO2, pay the most.
Band M rise and previous rates
These road users are currently placed into band M and pay £790 per year, although Barden has suggested this will rise to £825 next year, a £35 increase. This is slightly higher than the previous rise, when band M motorists saw a £30 increase, paying £760 in the 2025/26 tax year and £735 per annum over 2024/25.
The Treasury confirmed the VED rate changes after the Autumn Budget in October, stating: "The government will uprate VED rates for cars, vans and motorcycles in line with the Retail Prices Index (RPI) from 1 April 2027."
