The Government has issued an update about changes to road tax. Vehicle Excise Duty, also known as road tax, is set to increase in line with inflation again in April 2026.
Independent MP James McMurdock asked Chancellor Rachel Reeves in a written question in Parliament if she has any plans to « review the structure of Vehicle Excise Duty ». Treasury minister Dan Tomlinson provided a response from the Government.
He said: « 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. »
On the question of making changes to the system, Mr Tomlinson said: « The Government has no current plans to review this structure. » However, he did confirm that there are some important changes coming up.
The minister explained: « At Autumn Budget 2025, the government announced the introduction of Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing Vehicle Excise Duty (VED). »
Under the proposals, EV drivers will pay 3p per mile while those with plug-in hybrids will pay 1.5p per mile, with rates linked to inflation. The Government is currently running a consultation on the plans.
The consultation explains: « 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). »
Electric vehicles became subject to vehicle excise duty from April 2025. In the Autumn Budget, Chancellor Rachel Reeves announced that the VED Expensive Car Supplement threshold would increase from £40,000 to £50,000 from April 2026.
VED rates for vehicles of all types will rise in line with inflation from April 2026.
