Rachel Reeves’ automobile tax adjustments see UK drivers paying as much as £280 a yr
New VED car tax bands introduced by Chancellor Rachel Reeves have come into effect, with charges rising for almost all petrol, diesel and electric car owners — some now paying up to £280 per year
Owners of brand new cars are hit by some of the highest fees(Image: Getty)
Some drivers are now facing bills of up to £280 annually to use the roads following fresh car tax changes brought in by Chancellor Rachel Reeves. Fresh Vehicle Excise Duty (VED) car tax brackets took effect from April 1, with fees increasing right across the spectrum for nearly all petrol, diesel and electric vehicle owners.
Those set to be affected by the revised rates include purchasers of brand-new cars, with first-year tax charges among those going up. First-year tax charges represent a substantial fee paid by new car owners in the first year, with rates differing according to each vehicle’s emissions output.
High-polluting motors producing over 255g/km of CO2 are facing the steepest costs, with charges fixed at an eye-watering £5,690 to access the roads. Fees decrease for cleaner vehicles, with models producing between 76 and 90g/km of CO2 required to pay £280 annually.
This represents a £10 increase on the £270 levied on these owners before the April tax period, but stands at more than twice the amount paid by drivers during the 2024/25 tax year. Just over twelve months ago, first-year owners in this bracket paid merely £135 to get on the road, with charges now up by £145.
Motors in this bracket typically encompass modern full hybrids and highly efficient plug-in hybrids. Extremely efficient, small-engine petrol vehicles might just qualify for this bracket, though combustion models usually produce marginally higher emissions and could narrowly miss the threshold, reports the Express.
Following the initial year, owners of these vehicles will move to the standard VED charges, which currently stand at £200 annually. VED is compulsory, meaning drivers must tax their vehicle annually to remain legally on the road. This can be completed online within minutes, with charges paid either in full or through instalments.
HMRC confirmed the rise in tax charges shortly after Rachel Reeves’ Autumn Budget last year.
It stated: “As announced at Budget 2025, 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 (RPI) for 2026 to 2027. This will take effect from 1 April 2026.”
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