Rachel Reeves’ new car tax rates have been confirmed for April 1, with petrol, diesel, electric and hybrid car drivers set to pay more to travel on UK roads.
The Finance Bill, which incorporates new measures announced at the Autumn Budget, is expected to come into effect imminently, with the official document now revealing new Vehicle Excise Duty rates.
Changes to VED occur annually to align with inflation, with drivers paying the ultimate price with more expensive travel costs and taxes.
The new rates, in addition to the end of the 5p fuel duty reduction and Congestion Charge price hikes, could push some people to give up driving.
Rhydian Jones, car insurance expert at Confused.com, explained howfrom April, most drivers will see their car tax increase as part of the changes announced in the Autumn Budget.
He said: “These increases will affect drivers across the country, so it’s important to know what you will be expected to pay before your renewal date arrives.
“At a time when many other motoring costs are also set to rise this year, these new rates may come as unwelcome news for some drivers.”
He warned that the car tax amount can vary depending on when the vehicle was first registered and the type of fuel it uses.
Under the new rates, petrol and diesel drivers will pay roughly £20 more in car taxes
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For most petrol, diesel and electric cars, which pay the standard rate, experts suggested they will see their bill rise from around £195 to £200 under the new rules.
“The key thing is to make sure you understand how the new rates apply to your car so you can plan ahead,” Mr Jones added.
Drivers have been encouraged to familiarise themselves with the new rates and how long they have before they need to renew.
The Chancellor confirmed new changes to Vehicle Excise Duty in the Autumn Budget, as well as new measures for other motorists.
Vehicle Excise Duty rates are set to rise on April 1 | GETTY
She said: “I will reform our motoring taxes, exempting search and rescue vehicles from Vehicle Excise Duty as called for by my Honourable Friends, the members for the Western Isles and for Whitehaven and Workington.
“And because all cars contribute to wear and tear on our roads, I will ensure that drivers are taxed according to how much they drive and not just by the type of car they own by introducing Electric Vehicle Excise Duty on electric cars.”
The introduction of pay-per-mile charges from 2028 was met with anger from motorists, who warned that it would make electric vehicles less attractive.
The new rates will be payable each year alongside Vehicle Excise Duty at 3p per mile for electric cars and 1.5p for plug-in hybrids.
The new rates risk making travel costs for petrol and diesel cars exceedingly more expensive
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PANew 2026-2027 car tax rates for vehicles registered between March 1, 2001, and April 1, 2017
Up to 100g/km – Remains at £20
Between 101 and 110g/km – Remains at £20
Between 111 and 120g/km – Remains at £35
Between 121 and 130g/km – Rising from £165 to £170
Between 131 and 140g/km – Rising from £195 to £200
Between 141 and 150g/km – Rising from £215 to £225
Between 151 and 165g/km – Rising from £265 to £275
Between 166 and 175g/km – Rising from £315 to £325
Between 176 and 185g/km – Rising from £345 to £360
Between 186 and 200g/km – Rising from £395 to £410
Between 201 and 225g/km – Rising from £430 to £445
Between 226 and 255g/km – Rising from £735 to £760
Over 255g/km – Rising from £750 to £790
