Owners of older petrol and diesel vehicles registered before 2001 are set to pay more to use the roads under annual Vehicle Excise Duty (VED) price hikes. Annual bills are expected to rise by up to £15 for owners of older models as part of the annual car tax changes coming into effect from April.
VED fees increase every year in line with Retail Price Index (RPI) inflation, with 2026 set to be no exception. Fees are set to rise for every petrol, diesel and electric car owner with total costs usually calculated based on a vehicle’s total CO2 emissions. The total emissions of a vehicle places motorists into a special tax band where their annual VED fees are calculated.
However, cars and vans registered before March 1, 2001, use a different system, where the engine size determines the total costs. This VED price system covers vehicles registered between 1986 and 2001.
Owners of cars first hitting the road in 1985 are now exempt from paying fees under the historic vehicle tax rules. New analysis from Pete Barden has claimed cars with engines 1549cc and below will pay £230 in VED from 2026.
This marks a slight £10 rise on the current £220 fee, but mirrors the same increase from the 2024/25 tax year when charges stood at £210. There is a slightly higher rise for motorists with bigger engines exceeding 1549cc.
Motorists in this category will pay £375 in VED charges in 2026, a £15 rise on the current £360 bill. However, the price hikes again match the increase seen 12 months ago when bills stood at £345.
HM Revenue and Customs (HMRC) revealed details of their tax policies for the coming year after Rachel Reeves’ Budget statement last week.
HMRC explained: “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.”
