Rachel Reeves, the Labour Party Chancellor, is set to increase Vehicle Excise Duty (VED) rates for petrol and diesel drivers beginning Wednesday, April 1. This move follows decisions made in the Autumn Budget, aiming to adjust car tax in line with inflation and environmental impact.
While most drivers will experience a modest average increase of about £5, those with higher emission vehicles could face hikes of up to £40. The updated VED structure is designed to encourage lower emissions and reflect the environmental cost of driving more polluting vehicles.
In her November announcement, Reeves explained, “The temporary 5p fuel duty cut introduced during the pandemic will end in April but will be extended until September 2026 to ease travel costs.” She added measures to increase transparency at petrol stations by introducing a Fuel Finder tool, which will show real-time fuel prices to help motorists find cheaper options and combat price gouging. Reeves estimates this could save the average household around £40 annually.
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Industry experts echo the rising costs faced by motorists. Imran Malek, Corporate Sales Manager at TrackDays.co.uk, noted, “Although fuel prices have fluctuated, they have increased less than other motoring expenses like car tax and insurance over the past decade.”
The revised Vehicle Excise Duty rates, based on vehicle emissions measured in grams of CO2 per kilometer, are as follows:
- Up to 100g/km: £20 (no change)
- 101-110g/km: £20 (no change)
- 111-120g/km: £35 (no change)
- 121-130g/km: £170 (up from £165)
- 131-140g/km: £200 (up from £195)
- 141-150g/km: £225 (up from £215)
- 151-165g/km: £275 (up from £265)
- 166-175g/km: £325 (up from £315)
- 176-185g/km: £360 (up from £345)
- 186-200g/km: £410 (up from £395)
- 201-225g/km: £445 (up from £430)
- 226-255g/km: £760 (up from £735)
- Over 255g/km: £790 (up from £750)
These changes mark a significant increase in the costs for drivers of higher-emission vehicles, reinforcing the government’s commitment to environmental goals and fair pricing strategies in the transport sector.