The Treasury has confirmed that Vehicle Excise Duty (VED) rates will rise from April 2027, with drivers of older high-emission cars expected to pay £825 a year. The increase forms part of the annual inflationary uprating of car tax charges.
How VED rates are changing
VED charges rise in line with the Retail Price Index (RPI) inflation every 12 months, and 2027 is set to follow the same pattern, with fees climbing again from April. The standard VED rate for all cars registered after 2017 will rise from £200 to £210 per year, while first-year fees are also set to increase, with bills reaching as high as £5,950 per annum.
These figures were outlined by Pete Barden, who examined the potential price hikes following the announcement of the VED updates.
Impact on older high-emission vehicles
Older vehicles are also affected, with models registered between 2001 and 2017 divided into one of 13 VED tax bands, determined by overall pollution levels. The most polluting cars, emitting over 255g/km of CO2, bear the heaviest charges and are currently placed into band M, paying £790 per year.
Pete Barden indicated that this will increase to £825 next year, representing a £35 rise. This is a slightly steeper increase than in previous years, with vehicles in band M seeing a £30 rise last time around. Motorists paid £760 in the 2025/26 tax year, with bills standing at £735 per annum during 2024/25.
Treasury confirmation
The Treasury confirmed that VED rates would increase following the Autumn Budget in October. In a statement, they said: "The government will uprate VED rates for cars, vans and motorcycles in line with the Retail Prices Index (RPI) from 1 April 2027."
