UK Drivers Hit with £170 Charge: Rachel Reeves Confirms Rising Car Tax

Motorists in the UK are facing a significant increase in their car tax bills, with some drivers being charged as much as £170 to stay on the road. This comes after Rachel Reeves, the government minister overseeing the new car tax changes, confirmed the introduction of updated Vehicle Excise Duty (VED) bands. The changes, which came into effect on April 1, 2026, will see rising costs for almost all petrol, diesel, and electric car owners.

VED rates are tied to inflation and rise every spring, with the 2026 update being no exception. The fees have increased across the board, impacting motorists with vehicles first registered between 2001 and 2017. These road users are placed into one of 13 tax bands, which are determined based on the overall vehicle emissions. Higher polluting models are required to pay more to stay behind the wheel, with vehicles in car tax band D, emitting between 121 and 130g/km of CO2, facing a £170 fee in VED for the 2026/27 tax year.

This represents a £5 increase on the £165 fee applied to motorists over the last tax year, up until the start of April 2026. The £5 rise mirrors the increase of the year before, with road users charged £160 to use the roads over the 2024/25 tax year. Cars in this category typically include petrol and diesel hatchbacks and some compact SUVs, a segment of vehicles that are hugely popular on UK roads. Higher-polluting cars are charged more to use the roads, with cars emitting over 255g/km of CO2 paying £790 from this April.

Vehicle owners who no longer use their vehicles and wish to stop paying vehicle tax can apply for a Statutory Off Road Notification (SORN). It is a legal requirement for road users to ensure they correctly tax their vehicle before getting behind the wheel and driving on a public road. The increase in VED fees was confirmed by HM Revenue and Customs late last year, following Rachel Reeves' Autumn Budget statement. HMRC explained that 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.

The history of VED dates back to 1888, when the first locomotive act was introduced, requiring owners of motor vehicles to pay a tax to use public roads. Over the years, the tax has undergone several changes, with the most significant being the introduction of the current banding system in 2001. The system was designed to encourage drivers to switch to more environmentally friendly vehicles, with lower emissions being rewarded with lower tax rates. However, the constant rises in VED fees have put a strain on motorists, with many feeling that they are being unfairly penalized for using their vehicles.

Despite the controversies surrounding VED, it remains an essential source of revenue for the government, with the tax generating billions of pounds each year. The revenue generated from VED is used to fund various transportation projects, including road maintenance and construction. As the UK continues to transition towards more sustainable transportation options, it will be interesting to see how the VED system evolves to accommodate the changing landscape of the automotive industry.

In conclusion, the introduction of updated VED bands has significant implications for UK drivers, with many facing increased costs to stay on the road. As the government continues to prioritize environmental sustainability, it is likely that we will see further changes to the VED system in the coming years. Motorists would do well to stay informed about these changes and explore ways to minimize their tax liability, such as switching to more environmentally friendly vehicles or carpooling.