Vehicle Tax: vehicle tax hikes from April 1, 2026 and March rule changes

Vehicle tax changes due in the coming months will raise costs for many motorists. Vehicle Excise Duty rates are set to be hiked from April 1, 2026, and a series of March rule changes, including the expensive car supplement and new '26' plates from March 1, 2026, will also affect buyers.

Vehicle Tax increases from April

Vehicle Excise Duty rates will be increased from April 1, 2026, with standard VED rates rising in line with the Retail Prices Index. The Treasury confirmed that VED for cars, vans and motorcycles will rise in line with the Retail Price Index from the new financial year on April 1, 2026. For 2026/27, that means most drivers will see an increase from April 1. The Office for Budget Responsibility forecasts that VED will raise £9. 1billion in 2025/26, representing 0. 3 per cent of national income.

First-year VED changes

Labour confirmed that VED first year rates would change from April 1, 2025. Zero emission cars will pay a first year rate of just £10 until 2029-2030. Vehicles emitting between one and 50g of CO2 per kilometres will see modest increases and will pay £110 in the first year of registration, which covers the first 12 months on the road. For higher-polluting cars the differences are starker: cars in the 76-90g/km bracket were charged £270 but costs for vehicles emitting more than 76g/km have doubled for the most polluting bands, with the most polluting vehicles charged £5, 490. With the upcoming inflation-related rise for VED first year rates, motorists looking to invest in the most polluting vehicles could end up paying as much as £5, 690.

Diesel, RDE2 and emissions

Certain diesel drivers will face higher charges if their vehicles do not meet the Real Driving Emissions 2, or RDE2, standard for nitrogen oxide emissions. All other diesel cars which do not meet the RDE2 standard will see higher prices than other diesel vehicles if they emit between one and 255g/km, with rates being equalised when emitting more than 255g/km. Electric car and hybrid drivers are also due to face changes: pay-per-mile charges for electric car and hybrid owners are planned to launch from 2028, meaning those drivers will begin paying based on mileage from 2028.

Expensive car supplement cliff

From March 1, 2026, all new cars registered will carry a '26' plate, and rule changes in March include an update to the "expensive car supplement. " Steve Ramsey, Go Compare Motoring Expert, warned: "The 'expensive car supplement' cliff edge means that, if your car costs over £40, 000, you’ll pay an extra £410, at current rates, for each of the next five years. That’s over £2, 000 extra that you don’t pay on a car with a list price of £39, 995. So watch out, as just upgrading the trim on your new car could be very costly. And don’t think negotiating a discount with the dealer will help, as it's the list price that counts, not the price you paid. "

For buyers of electric vehicles, the expensive car supplement threshold for EVs is rising to £50, 000 if they can wait until the start of April for delivery. Ramsey also noted a timing issue for insurance: "If you buy insurance on the same day your car is delivered, you’ll pay nearly 40% more than if you’d got a quote 26 days earlier. "

Practical steps for drivers

Drivers are reminded that VED is administered by HM Revenue & Customs and enforced the Driver and Vehicle Licensing Agency. Steve Ramsey advised budgeting for the changes and checking tax bands before purchase. He explained: "Vehicle Excise Duty, or 'road tax' as many of us incorrectly know it, is a necessary cost of running a car. Not everyone pays the same, though, so if you drive a big gas guzzler or you’re just struggling to cover the VED, there are options. You can pay for VED monthly by Direct Debit, as well as the six-monthly and annual options. It works out slightly cheaper to pay annually as there’s a surcharge for the other methods, but they do allow you to spread out the payments. " He added: "It's a good idea to check the tax band of your car before you buy it, so you can budget for your VED along with the other running costs. "

HMRC also updates Advisory Fuel Rates each quarter, including in March, and those rates are used to calculate employer reimbursements for business mileage in company cars. Ramsey urged accurate daily logs and record-keeping: "If the rate does change, then accurate records are essential to make sure you’re claiming the right rate for the right period. If you claim mileage costs from your employer, keeping accurate daily logs of all your business miles means you can not only prove your claims to your employer, but also make sure you’re not left out of pocket. " He warned drivers to check tax positions if reimbursements differ from AFRs.

Number plate rules are also being enforced more strictly: number plates must follow strict DVLA rules or drivers can lose their registration, face a £1, 000 fine and fail their MOT. Police have ramped up checks on cloned plates and illegal spacing.

The provided coverage also includes an item titled "Verifying Device. " Two example VED bands listed in the round-up show 151-170g/km rising from £1, 360 to £1, 410 and 171-190g/km rising from £2, 190 to £2, 270.

Motorists across the UK are set to be affected by these measures and should budget ahead as changes arrive in March and the new financial year.

Closing note: unclear in the provided context about any additional enforcement timetables beyond the dates and rates cited above.