Owners of certain vehicles will be hit with a £200 car tax increase in 2026 as part of updates to Vehicle Excise Duty (VED) fees. VED rates rise in April every year in line with Retail Price Index (RPI) inflation, with bills set to go up once again in 2026.
Owners of petrol, diesel and electric cars will all pay higher VED from the Spring, but those with keys to brand new polluting vehicles will be more affected. First-year VED fees are higher, with road users paying thousands of pounds in the first year on the roads.
Fees are highest for models emitting over 255g/km of CO2, with road users to pay well over £5,000 to get behind the wheel. According to analysis by Pete Barden, vehicles emitting over 255g/km of CO2 will incur a £5,690 charge from April 2026.
This is up from the £5,490 fee paid by road users in 2025, meaning road users face a £200 increase within months. Fees are up across the board, with motorists holding the keys to less polluting models also affected.
Cars emitting between 226 and 255g/km of CO2 will pay £4,850 per year, up from the £4,680 annual charge. Those cars emitting between 191 and 225g/km will pay £3.420, an increase on the £3,300 annual charge currently paid by motorists.
First-year rates were significantly overhauled earlier in 2025, resulting in a major increase in fees that doubled many bills. Previously, first-year VED fees stood at just £2,745, but this was quickly increased to over £5,000 in a blow for road users.
VED funds are no longer entirely ringfenced for road maintenance, instead being paid into the Government’s central fund to finance public services. HM Revenue and Customs (HMRC) stressed that fees would only rise in line with inflation.
HMRC said: “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.”