Reeves raises standard VED to £200 in Dvla Tax changes
Rachel Reeves oversaw dvla tax changes in April that raised the standard Vehicle Excise Duty rate from £195 to £200. Many petrol, diesel and electric car owners now face higher annual costs, with the biggest jumps hitting the most polluting vehicles and some first-year registrations.
The increase started at the beginning of April, when Labour uprated VED in line with inflation for cars, vans and motorcycles. Vehicles registered between March 1, 2001, and April 1, 2017, also saw modest annual rises, while the most polluting petrol and diesel vehicles went from £750 to £790.
Rachel Reeves and VED
Reeves oversaw a wider set of changes that went beyond the standard rate. The Government doubled first-year rates for any vehicle emitting more than 100g of CO2 per kilometre, and petrol and diesel cars emitting over 255g/km and registered on or after April 1, 2026, will face costs of £5,690.
Newly registered EVs will pay £10 in addition to the standard rate. Some electric vehicles must also pay the Expensive Car Supplement, which costs £440 for five years after the second year of registration. The value threshold for that supplement rose from £40,000 to £50,000.
Older Cars and HGV Rates
Any vehicle built before January 1, 1986, can now stop paying VED, but it must still be taxed. VED for heavy goods vehicles rose in line with inflation, and the HGV levy also rose in line with inflation.
Shanika Amarasekara, the chief executive of the Finance and Leasing Association, said the group had concerns about aspects of the car finance redress scheme but wanted a practical solution that gave consumers timely compensation and the motor finance industry and wider market clarity and finality. She said: “We continue to have concerns about aspects of the scheme, but our priority is that a practical solution be reached that ensures timely compensation for consumers while giving the motor finance industry and the wider market clarity and finality on this issue.”
Finance and Leasing Association
The Financial Conduct Authority estimates that 12.1 million agreements will be eligible for redress, at a total cost of £9.1 billion, or £829 per agreement. Some legal experts warned that compensation could be delayed as lenders and major banks mount a legal challenge, leaving motorists waiting longer for any payment linked to the separate finance scheme.
For drivers, the immediate change is simpler: the new April VED rates now set the annual bill for many vehicles, and the sharpest costs fall on high-emission cars and some new registrations. That means owners comparing renewal notices or new-car prices should check the vehicle’s CO2 band, first-year rate and whether the Expensive Car Supplement applies before they buy or renew.
