Vehicle Excise Duty UK remains one of the most significant taxes affecting motorists, and fresh changes coming into force on 1 April 2026 will reshape how much drivers pay across the country.
The government will uprate Vehicle Excise Duty (VED) in line with the Retail Price Index (RPI), increasing costs for petrol, diesel, and electric vehicle owners alike.
While most drivers will see moderate rises, owners of high-emission and high-value vehicles will face the steepest increases.
Vehicle Excise Duty, sometimes called road tax or car tax, applies to vehicles used or kept on public roads in the UK.
The legal framework sits under the Vehicle Excise and Registration Act 1994, and the Driver and Vehicle Licensing Agency (DVLA) administers and collects the tax.
Although many motorists associate VED with road maintenance, the government pools the revenue with general taxation. The DVLA collects around £5 billion annually through the system.
From April 2026, traditional petrol and diesel cars will bear much of the increase. First-year rates for new cars remain tied to CO2 emissions, and the highest-emitting vehicles will pay the most.
Brand-new petrol and diesel cars that emit over 255g/km of CO2 will see their already substantial first-year bills rise again.
These vehicles previously experienced a dramatic jump, with first-year charges doubling from £2,745 to £5,490.
From April 1, that figure will climb further to £5,690. Buyers of high-performance supercars and large luxury SUVs will feel this increase most sharply, but even performance models from mainstream brands will face the top £200 rise.
Cars emitting between 226g/km and 255g/km of CO2 will also see a notable increase, paying £4,850 for the first year, up £170 from the current £4,680 rate.
The system deliberately strengthens the environmental signal by charging more for higher emissions while maintaining lower first-year rates for cleaner vehicles.
The structure of vehicle excise duty UK depends heavily on the date of first registration. Cars registered before 1 March 2001 fall into the older Private/Light Goods system, where engine size determines the rate.
Vehicles registered between March 2001 and 31 March 2017 follow a CO2 banded system split into 13 categories.
Since 2025 rule changes, even cars emitting under 100g/km of CO2 no longer qualify for free road tax and must pay at least £20 per year.
For cars first registered on or after 1 April 2017, the government introduced a reformed system that combines CO2-based First Year Rates with a flat Standard Rate in subsequent years.
Under this structure, zero-emission vehicles pay £0 in the first year and £0 as the standard rate under the original framework.
Other vehicles pay first-year charges ranging from £10 for very low emissions up to £2,000 for cars emitting over 255g/km.
After the first year, most vehicles move to a flat standard rate, which is expected to rise from £195 to £200 in April 2026 in line with inflation.
Electric vehicles no longer escape VED entirely. From April 2025, new electric cars began paying the standard annual rate, and from April 2026 most EV drivers will pay the £200 flat rate.
The government will also adjust the Expensive Car Supplement threshold for electric vehicles.
From 1 April 2026, EVs with a list price above £50,000 will attract the additional £425 annual supplement for five years, while EVs registered from 1 April 2025 onwards priced below £50,000 will avoid the charge.
This change replaces the previous £40,000 threshold for electric cars and aims to balance fairness while encouraging adoption of zero-emission vehicles.
Looking further ahead, the government plans to introduce a pay-per-mile system for electric and plug-in hybrid cars from April 2028.
Under the proposed Electric Vehicle Excise Duty (eVED), fully electric drivers will pay 3p per mile and plug-in hybrid drivers will pay 1.5p per mile.
Based on an average of 8,000 miles per year, an electric car owner could pay around £240 annually on top of the existing VED rate.
While the government has pledged to protect motorists’ privacy, it has not yet confirmed how mileage reporting will operate, although MOT test centres may play a role in verifying annual distances.
The policy objective behind these reforms reflects shifting emissions trends. When the CO2-based banding system launched in 2001, average new car emissions stood at 178g/km.
As manufacturers improved efficiency and met stricter European targets, average emissions dropped significantly.
This shift meant that increasing numbers of drivers paid little or no VED, which weakened the environmental incentive and reduced revenue sustainability.
The reformed system strengthens first-year incentives for ultra-low emission vehicles while simplifying long-term charges with a flat standard rate.
Vehicle excise duty UK also imposes strict compliance requirements. Drivers must tax their vehicle before using it on public roads, and the vehicle must carry valid insurance and an MOT certificate if it is over three years old.
The DVLA manages VED electronically, and law enforcement agencies use Automatic Number Plate Recognition (ANPR) cameras to identify untaxed vehicles.
Drivers who fail to tax their vehicles face an £80 Late Licensing Penalty, which can escalate if unpaid. Courts may impose fines of up to £1,000 or more in serious cases, and authorities may clamp or remove untaxed vehicles.
Importantly, no one will pay more for a car they already own due to structural changes in the post-2017 system. The reforms primarily affect purchasers of cars first registered from 1 April 2017 onwards.
The system maintains exemptions and discounts for eligible disabled motorists receiving mobility-related benefits, ensuring that accessibility considerations remain protected.
As April 2026 approaches, the vehicle excise duty UK will place greater financial pressure on high-emission vehicle buyers while gradually increasing costs for most motorists through inflation-linked adjustments.
At the same time, the government continues to incentivise zero-emission vehicles through lower first-year rates and adjusted luxury thresholds, even as it moves to ensure that electric drivers contribute to the tax base.
For drivers across the UK, understanding registration dates, emissions bands, and vehicle list prices will remain essential in calculating how much road tax they must pay in the years ahead.
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