Vehicle Excise Duty: Car tax hikes, 59 cars hit by doubled fees, and HGV increases set for April

Vehicle excise duty will see major changes that matter to drivers and the logistics sector: car tax rates are set to be hiked from April 1, 2026, first‑year rates change from April 1, 2025, and heavy goods vehicle VED is due to rise in line with the Retail Price Index this coming April. These moves, announced as part of a recent Autumn Budget and linked fiscal measures, create immediate cost implications for motorists and hauliers.

Vehicle Excise Duty and first-year rate changes

Chancellor Rachel Reeves unveiled new car tax rates in the recent Autumn Budget. Labour confirmed that VED first year rates would change from April 1, 2025: zero emission cars will pay a first year rate of £10 until 2029-2030, and vehicles emitting between 1 and 50g of CO2 per kilometre will face a first year charge of £110 covering the first 12 months of registration.

How much more will drivers pay for high‑emission cars?

The Budget widened differentials between internal combustion engine vehicles, hybrids and electric cars in the previous year and introduced steep increases for the most polluting models. Vehicles emitting more than 76g/km saw costs jump sharply, described as doubling from a previous figure of £270 for cars in the 76-90g/km bracket to £5, 490 for the most polluting vehicles. With an inflation-related uplift to first year rates on April 1, 2026, that top figure could reach £5, 690 for motorists buying the most polluting cars.

Specific band increases noted include: 151-170g/km rising from £1, 360 to £1, 410, and 171-190g/km rising from £2, 190 to £2, 270.

Electric and hybrid drivers: pay‑per‑mile arrival and diesel testing standards

The Autumn Budget also set out plans for pay‑per‑mile charges for electric car and hybrid owners to begin from 2028. Diesel drivers will face differential treatment depending on Real Driving Emissions 2 (RDE2) compliance: diesel vehicles that do not meet the RDE2 standard for nitrogen oxide emissions will pay higher VED rates if they emit between 1 and 255g/km, with rates equalised only when emissions exceed 255g/km.

HGVs: uprating VED in line with RPI and industry alarm

Ministers have raised concerns about plans to raise Vehicle Excise Duty for heavy goods vehicles this April. The planned increase will uprate HGV VED in line with the Retail Price Index from 1 April. VED rates for HGVs apply to rigid trucks without trailers and tractive units, the cab of an articulated lorry, rigid goods vehicles with trailers, vehicles with exceptional loads, and haulage vehicles other than showman’s vehicles.

For context, the annual VED for a 44 tonne truck is set at £1, 643 for 2025/26. This will be the first hike since 2014, when HGV VED was frozen, and it will coincide with an annual rise in HGV Levy rates also scheduled to go up on 1 April.

Industry pressures: fuel duty rises, costs and decarbonisation concerns

Hauliers face further cost pressures from staged fuel duty increases that add to concerns over the timing of the VED rise. Fuel duty will increase in stages: an extra 1p per litre on 1 September this year; 2p per litre on 1 December; a further 2p per litre on 1 March 2027; and from April 2027 fuel duty will rise in line with the Retail Prices Index.

At a parliamentary meeting scrutinising the Finance Bill, Shadow Exchequer Secretary James Wild raised concerns about the timing of HGV VED and the absence of meaningful backing for the logistics sector, calling HGV vehicle excise duty already complex because it contains more than 80 different rates that vary by weight, emissions, class and configuration. He emphasised the sector faces broader cost pressures from rising business rates, higher fuel duties and increased employment and transport taxes.

Research cited in that meeting estimates fuel duty adds more than £2, 000 a year to the cost of operating a single HGV and amounts to some £435m across the sector. The logistics industry is described as contributing £170bn in gross value added and employing around 8% of the workforce. The sector warned the government that these fiscal changes risk stalling progress on decarbonisation and highlighted a lack of fiscal support for low‑carbon fuels such as hydrotreated vegetable oil, which industry views as an essential transitional solution while battery and hydrogen technology scale up. Industry voices also noted there is no sign of extending full expensing to higher bands, which they think merits consideration. Questions were raised about what assurances the Minister can give to provide the logistics sector with the confidence to invest.

Forecast revenue and other coverage items

The Office for Budget Responsibility forecasts that Vehicle Excise Duty will raise £9. 1 billion in 2025/26, representing 0. 3% of national income. Separate headlines in coverage include a full list claim that 59 cars have been hit by doubled tax fees, and an item titled "Verifying Device" appears in circulation; details for the latter are unclear in the provided context. A truncated note indicates Liberal Democrat MP Joshua Reynolds agreed with concerns about haulage but that passage is incomplete and unclear in the provided context.

What happens next

Drivers and operators face scheduled changes across 2025–2028: first‑year VED changes from April 1, 2025; inflation‑linked first year uplifts and wider VED increases from April 1, 2026; pay‑per‑mile for electric and hybrid vehicles from 2028; and staged fuel duty rises through 2027. Stakeholders have flagged timing and support concerns; policy reactions and any additional mitigations remain to be disclosed.