Certain drivers are paying up to £790 per year in Vehicle Excise Duty due to new fees introduced by Chancellor Rachel Reeves, with new tax bands taking effect from April 1 and almost all drivers facing higher prices. Cars emitting over 255g/km of CO2 now pay £790 per annum, a £30 increase from the previous £760 rate. Motorists with cars in Bands I, J, and K face costs rising by £15 per year from April 1, while cars in bands F, G, and H are hit with £10 price hikes.
£5 is added to the bills for vehicles in bands D and E, but drivers in Bands A, B, and C, with cars emitting up to 120g/km of CO2, are not paying any extra to use the roads. HMRC explained that legislation in Finance Bill 2025-26 will uprate Vehicle Excise Duty rates for cars, vans, and motorcycles in line with the Retail Price Index for 2026 to 2027, effective from April 1, 2026. According to HMRC, the government will introduce legislation in Finance Bill 2025-26 to uprate Vehicle Excise Duty rates for cars, vans and motorcycles in line with the Retail Price Index for 2026 to 2027, taking effect from April 1, 2026.
The exact number of drivers affected by the new Vehicle Excise Duty rates and the total revenue increase expected from these tax changes remain unknown, as does the specific rationale behind the varying increases across different emission bands.