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Motorists are having to pay thousands of pounds to get behind the wheel due to new car tax bands, which came into effect this month. New Vehicle Excise Duty (VED) prices began affecting motorists from April 1, 2026, with road users hit by annual inflationary rises.

VED rates have gone up across the board, with almost all petrol, diesel and electric car owners affected in some way. However, owners of brand-new cars are among the most affected, with first-year VED rates seeing the largest increases. Owners of brand-new, highly polluting models emitting over 255g/km of CO2 have been hit with bills £200 higher, taking annual costs to £5,690.

New models emitting between 226 and 255g/km of CO2 are next, with these road users facing the next highest increase, with annual costs now at £4,850 per year. It comes just a year after Labour doubled first-year tax rates, which sent prices skyrocketing.

Just over 12 months ago, owners of brand new models emitting over 255g/km of CO2 were paying just £2,745 to get behind the wheel. Although HM Revenue and Customs (HMRC) manages the legislation and policy behind the tax, fees are collected and processed by the DVLA.

The new 2026/27 fees are set out in HMRC's rates and allowances report published last December.

HMRC previously said: "As announced at Budget 2025, the Government will introduce legislation in Finance Bill 2025-26 to uprate Vehicle Excise Duty rates for cars, vans and motorcycles in line with the Retail Price Index (RPI) for 2026 to 2027. This will take effect from 1 April 2026."

However, it's not all bad news for first-year car owners, with fees not changing for those opting for electric cars. The first-year VED fee remains at £10 in 2026/27 for any vehicle emitting 0g/km of CO2, the same rate as issued to road users in 2025/26.

Electric vehicles were formerly completely exempt from VED car tax fees until the end of 2024-25 when charges first came into effect.