Labour and Chancellor John Healey is set to introduce new Vehicle Excise Duty (VED) car tax bands on road users within a matter of months.
Motorists face VED increases from April 2027 (Image: Getty)
Labour will introduce a new £5,950 car tax charge affecting petrol and diesel drivers in a matter of months as part of annual Vehicle Excise Duty (VED) increases, according to experts at Pete Bardem. The motoring specialists have calculated VED price hikes for the 2027/28 year after the Treasury confirmed another annual inflationary rise from April next year. The standout increase is around first-year tax fees for brand new cars, with rates rising by hundreds of pounds in a staggering blow.
Cars emitting over 255g/km currently pay £5,690 in their first year on the roads, but this is expected to rise by £260 next Spring to hit £5,950. Fees for the highest-polluting models stood at just £2,745 in early 2025, meaning fees will have now increased by more than £3,000 in just over 48 months.
First-year rates will also increase across the board, with owners of brand new cars emitting between 22 and 255g/km of CO2 among those facing increases. Fees are expected to increase from the current £4,850 to £5,070 in another £220 hit on motorists’ bank accounts.
Meanwhile, cars emitting 191 to 225g/km will pay £3.575 in year one from April 2027, another rise on the current £3,420 fees. VED price hikes were confirmed in the Treasury’s Budget document which was released just hours after John Healey’s speech in the House of Commons on Wednesday.
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The report reads: “The government will uprate VED rates for cars, vans and motorcycles in line with the Retail Prices Index (RPI) from 1 April 2027.”
Fees will rise by hundreds of pounds next April (Image: Getty)
However, motorists will be pleased this is just a standard uprating in line with inflation and nothing much more substantial. Rachel Reeves doubled first-year tax bands in April 2025, which saw fees soar by thousands of pounds.
However, any tax rise is sure to be unpopular for motorists, with road users across the country already battling rising running costs, particularly fuel. In his Budget statement, Mr Healey claimed he understood that motorists needed help with their finances.
He said: “For millions of people the cost of living and the cost of doing business is the same. The home is the office and the van is the family car.”