Need to know
The Government has responded to a parliamentary question about Vehicle Excise Duty changes
The Government has responded to a parliamentary question about Vehicle Excise Duty changes(Image: National Highways/PA)
The Government has issued an update concerning alterations to road tax. Vehicle Excise Duty, commonly referred to as road tax, is set to increase in line with inflation once again in April 2026.
- Under the fresh proposals, drivers of electric vehicles will be charged 3p per mile, while those driving plug-in hybrids will pay 1.5p per mile, with both rates subject to increases linked to inflation. The Government has initiated a consultation on these plans.
- The consultation document reads: “It will be set at half of the equivalent rate of fuel duty for electric cars, and half again for plug-in hybrid cars. eVED will ensure all car drivers contribute, but will still maintain important incentives to switch to an electric vehicle. eVED will not require ‘trackers’ in cars, nor will the government ask people to interact with a whole new tax system: car drivers will pay for the miles they drive alongside paying their usual road tax (VED).”
- From April 2025, electric vehicles became subject to vehicle excise duty. In the Autumn Budget, Chancellor Rachel Reeves announced that the VED Expensive Car Supplement threshold would be increased from £40,000 to £50,000 from April 2026.
- VED rates for all types of vehicles will rise in line with inflation from April 2026.
- Independent MP James McMurdock posed a written parliamentary question to Chancellor Rachel Reeves about whether she plans to “review the structure of Vehicle Excise Duty”. Treasury minister Dan Tomlinson provided the Government’s reply.
- He stated: “Vehicle Excise Duty (VED), sometimes known as ‘road tax’ or ‘ car tax ‘, is a tax on vehicles used or kept on public roads. Different rates apply to cars, vans, and motorcycles, and the rate for each vehicle is calculated according to a range of factors, such as its date of first registration, weight, or CO2 emissions.”
- However, he did concede that significant changes are forthcoming, reports the Mirror.
