Rachel Reeves is ready to dip her grubby mitts into motorists' pockets once again and this time almost nobody is safe. The Chancellor has green-lit increased Vehicle Excise Duty (VED) rates for petrol, diesel and electric car owners from April, with some owners facing paying hundreds more to leave their driveways.
New fees are unsurprising given that VED rates are annual rises with charges increased by a little each year in line with inflation. But, given the Chancellor added thousands to bills last spring as part of a ruthless overthrow of motoring tax brackets, drivers would be forgiven for wanting a year off getting their wallet out for more.
That’s not going to happen, with new VED rates coming into force from April 1 as part of the latest Labour blow to Britain's 42 million licence holders. According to Pete Barden, owners of brand new petrol and diesel combustion models are set to be the most affected, with year one tax rates on vehicles emitting over 255g/km up £200 from £5,490 to £5,690.
Meanwhile, standard VED rates for models released after 2017 are predicted to rise from £195 per year to £200. VED fees are a legal requirement, meaning Reeves has UK drivers right where she wants them. Road users cannot simply take a stand and refuse to pay if they want to keep their motoring freedoms.
However, there are a few other ways motorists can ensure they beat down Reeves’ new plan and save their own wallets from another battering in 2026. Firstly, owners of brand new electric models emitting 0g/km of CO2 will pay the same £10 fee in their first year on the road.
This is great for year one, but fees will then increase higher the next year as policies switch to the standard fee. VED fees remain the same for older electric and low-emission models registered between 2001 and 2017.
Those in VED band A emitting up to 100g/km of CO2 will again pay £20 per year from April, as will those in VED band B emitting between 101 and 110g/km.
These annual charges may rise slightly in 2027, but owners will not be pushed up to the standard VED charge of £200. The only way to beat Reeves is to ditch the petrol and diesel car for a second-hand electric built before 2017.
Examples of these include the early models of the Nissan Leaf and some Renault Zoe, BMW i3 and Tesla Model S versions. Switching cars may be motorists' only option with the petrol and diesel attacks only likely to intensify before the end of the decade.
