Vehicle Excise Duty: Full breakdown of car and HGV tax hikes hitting drivers and hauliers this spring
Vehicle excise duty is set for a large reset from 1 April 2026, with new inflation-linked increases for cars, vans and motorcycles and a parallel hike for heavy goods vehicles (HGVs). The moves, announced in the Autumn Budget, change first-year bands, create steeper penalties for high-emitting cars and layer additional costs onto already stretched hauliers — details that will affect purchasing choices, operating costs and decarbonisation plans.
Vehicle Excise Duty: April 2026 car tax hikes and who pays
From 1 April 2026, VED rates for cars, vans and motorcycles will rise in line with the Retail Price Index. The Chancellor set out the new car tax schedule in the Autumn Budget and also signalled a shift in policy introduced the prior year that widened differentials between internal combustion engine vehicles, hybrids and electric cars. The Office for Budget Responsibility forecasts that VED will raise £9. 1 billion in 2025/26, representing 0. 3% of national income.
First-year bands, zero-emission rates and the most polluting cars
Changes to first-year rates were confirmed for an earlier date, with first-year VED rates altered from 1 April 2025. Zero-emission cars will pay a first-year rate of £10 until 2029-2030. Vehicles emitting between 1 and 50 g of CO2 per kilometre — a band that includes many hybrids — will face modest increases and will pay £110 in the first year of registration, covering the initial 12 months on the road.
Costs jump sharply for higher emitters: vehicles emitting more than 76 g/km saw first-year charges double from a previous £270 for the 76-90 g/km bracket up to £5, 490 for the most polluting vehicles. With the inflation-related uprating set for April 2026, buyers of the highest-emission cars could face bills reaching £5, 690. An intermediate band — 151-170 g/km — moves from £1, 360 to £1, 410.
Diesel rules and future mileage charging for electrified vehicles
Diesel owners face additional complexity tied to nitrogen oxide emissions. Diesel vehicles that do not meet the Real Driving Emissions 2 (RDE2) standard will attract higher VED charges; diesel cars that fail RDE2 will pay more if they emit between 1 and 255 g/km, with rates equalising only above 255 g/km. Looking further ahead, pay-per-mile charging for electric cars and hybrids is planned to begin from 2028, creating a new operating-cost consideration alongside fixed VED bands.
HGV increases, fuel duty rises and growing industry alarm
Ministers and MPs have warned the government that plans to raise VED for HGVs from 1 April will place pressure on hauliers. The planned hike — announced in the Autumn Budget — will uprate HGV VED in line with RPI from 1 April. VED for HGVs applies to a range of vehicle types, including 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 a 44-tonne truck, the annual VED is set at £1, 643 for 2025/26.
This will be the first HGV VED rise since 2014, and it will coincide with an annual increase in HGV Levy rates on 1 April. Hauliers also face staged rises in fuel duty: an extra 1p per litre added on 1 September this year (reversing the temporary 5p-per-litre cut introduced in 2022), a 2p-per-litre increase on 1 December, another 2p on 1 March 2027, and from April 2027 fuel duty will again rise in line with RPI.
Parliamentary scrutiny and sector warnings
In a meeting scrutinising the Finance Bill, Shadow Exchequer Secretary James Wild raised concerns about the timing of these increases and the lack of meaningful backing for the most affected industries, especially the logistics sector. He highlighted that HGV vehicle excise duty already has more than 80 different rates, varying by weight, emissions, class and configuration. Operators face a difficult environment with pressures from rising business rates, higher fuel duties and increased employment and transport taxes.
Research cited in the discussion estimates fuel duty adds more than £2, 000 a year to the cost of operating a single HGV, amounting to £435 million in additional costs across the sector. The logistics industry was described as contributing £170 billion in gross value added and employing around 8% of the workforce, underscoring calls for government support. The sector warned that the combined measures risk stalling progress on decarbonisation, noting a lack of fiscal support for low-carbon fuels such as hydrotreated vegetable oil and no sign of extending full expensing to higher bands — steps the industry says merit consideration.
Questions were put to ministers about what assessment has been made of the impact of these increases on the industry’s ability to invest, be efficient, grow and decarbonise. Liberal Democrat MP Joshua Reynolds agreed that the haulage s — unclear in the provided context.
These overlapping changes mean drivers and operators must factor higher fixed taxes, new mileage-based charges for electrified vehicles from 2028, and stepped fuel duty increases into short- and medium-term budgets. Clarity on transitional support and fiscal incentives will be central to how the sector adapts.
