Rachel Reeves Confirms £375 Vehicle Excise Duty Charge for Older Cars

Drivers of older cars will face a £375 annual Vehicle Excise Duty (VED) charge under new regulations announced by Chancellor Rachel Reeves from the Labour Party government. Starting in 2026, vehicles registered between 1986 and 2001 with engine sizes over 1549cc will be subject to this higher fee.

Paul Cowland, presenter of the TV show Savage Hunters, commented on the change: “For cars made before 2001, bigger engines can cost up to £375 per year. While it’s not a massive increase, those running larger, more powerful vehicles will see slightly higher costs than last year, though hopefully it won’t be a deal breaker.”

Cars registered before 1 March 2001 are classified as Private/Light Goods (PLG) vehicles or private motor cars and goods vehicles with a maximum revenue weight of 3,500kg. The VED system for these vehicles categorizes them by engine size, with rates differing for those below and above 1549cc.

For cars registered after March 2001 but before April 2017, the RAC explains that road tax rates are divided into 13 bands based on CO2 emissions. Lower emissions mean lower tax bands. Since 2025, vehicles emitting less than 100g/km of CO2 no longer qualify for free road tax and now incur a £20 annual charge. Petrol and diesel cars registered in this period generally face similar tax rates.

Vehicle owners will automatically receive reminders when their tax is due for renewal, typically at the end of the month preceding expiry. For example, a vehicle taxed from 1 January for 12 months must be renewed before the end of December. Owners can choose to tax their car for either six or twelve months and are responsible for road tax as soon as they take ownership.

While these changes increase costs for some older vehicles, owners purchasing newer, more efficient cars may see reduced or even zero road tax fees by choosing wisely.