VED road tax: everything you need to know about UK car tax

car tax calculator
3 Apr, 2018 11:45am Dean Gibson

Baffled by the UK car road tax system? Our comprehensive guide explains how much you'll pay on your next car

Road tax. It's one of the running costs that you need to think about when buying a new car. Over the years, the Government has revised and updated UK vehicle tax, otherwise known as VED (Vehicle Excise Duty), to reflect the buying habits of the general public. As a result, there will be different tax rates for a car, depending on when it was first registered. This round-up shows you how much you will pay for your car's road tax, no matter its age.

The most recent changes to UK road tax came in April 2018, but it was only 12 months earlier that the last lot of big revisions came in. With such frequent updates, it's easy to be confused about how much you'll pay in road tax. All of these chages are designed to boost tax income for the Government. With car makers reducing vehicle emissions, it meant the Treasury wasn't getting as much revenue from VED road tax, so it felt the need to update the road tax structure. As a result new car buyers will collectively pay more into HM Treasury each year when their annual reminder from the DVLA comes through the post when compared to recent years.

2018 road tax changes explained

But the Government hasn't stopped with the revisions, because another set of changes are due to be implemented in 2020. This will bring tax into line with new emissions tests that the car industry is gearing up to use. This new WLTP emissions test is supposed to deliver more realistic emissions results, and the Government claims that the updates won't affect how much car buyers will pay in road tax. 

How much will it cost to tax my car?

If you're buying a new car, then you will pay road tax based on the current system that was introduced on 1 April 2018. First-year road tax is based on emissions, while there's a flat rate of road tax for subsequent years. The first-year rate is included in a new car's on-the-road price, and is of more concern to the manufacturer than the buyer. However, the second-year rate is what you'll pay after 12 months of owning the car.

VED tax bands explained

This rate varies depending on whether your vehicle is electric, powered by a combustion engine (petrol or diesel) or uses an alternative fuel source (plug-in hybrid, LPG, etc). In addition, a supplement is added for the first five years of road tax if a car costs more than £40,000 new, irrespective of whether it's electric, petrol, diesel or hybrid.

Diesel cars not meeting RDE2 emissions standards are also taxed more heavily than petrol cars, sitting one band higher than petrols for the first-year rate (and only the first-year rate). While diesels certified to RDE2 standards can theoretically escape this rate rise, the standards aren't being officially introduced until 2020, so it is not currently possible for a car to be certified to them.

The rates are as follows: 

VED tax bands for new cars registered from 1/4/2017 onwards

VED car tax bands for cars first registered from 2017 onwards
Emissions (g/km of CO2)Diesel cars meeting RDE2 and petrol cars first-year rateAll other diesels first-year rateAlternative-fuel vehicle first-year rateStandard petrol/diesel annual rateStandard alternative fuel annual rate
0£0£0£0£0£0
1-50£10£25£0£140£130
51-75£25£105£15
76-90£105£125£95
91-100£125£145£115
101-110£145£165£135
111-130£165£205£155
131-150£205£515£195
151-170£515£830£505
171-190£830£1,240£820
191-225£1,240£1,760£1,230
226-255£1,760£2,070£1,750
Over 255£2,070£2,070£2,060
Cars above £40,000 pay £310 annual supplement for five years from the second year of registration.

Basically, if you haven't bought a zero-emissions electric car that costs less than £40k, then you're going to have to pay road tax of at least £130 a year if you buy a brand-new car.

The £40,000 limit isn't just based on list price, because you'll also pay the higher rate if you add enough options to a car to push it over the £40k barrier. Unfortunately, if you're an expert haggler and manage to negotiate a discount off a £40-grand car that takes it below the magic number, you'll still be liable for the £310 premium. And that £310 premium is what you'll pay to drive an EV that costs more than £40,000, so you won't beat the system by buying a Tesla or Jaguar I-Pace.

If you've traded in a car on a lease in recent years, these revised tax rates might come as a bit of a shock. That's because some cars that only cost peanuts to tax in the past may have seen a sharp rise in rates to the DVLA after April 2017. That's especially true if you've come to the end of a lease deal and simply swapped into a newer version of the car you previously ran.

Road tax for older cars

If all of these changes seem daunting, they won't affect a car that has already been registered and is liable to annual road tax. None of these new tax rates are backdated, so they will only apply to new cars, so your current car will cost the same in road tax for the rest of its serviceable life, including if you put it back on the road after making a SORN (Statutory Off-Road Notification) declaration.

These tax changes don't apply to vans or pick-up trucks, either, as these qualify for light commercial vehicle (LCV) road tax, which is independent of car tax. This is currently set at a flat rate of £240, although like car tax this can be changed by the Treasury in future Budget statements to reflect vehicle buying trends.

Road tax for cars registered from 1 March 2001 to 31 March 2017

The Government first introduced emissions-based vehicle taxation in 2001, when it created tax bands for cars which increased the amount of road tax paid depending on the emissions produced by a car. When the most recent road tax changes took place on 1 April 2017, all cars registered in the previous way had their tax frozen at the following rates:

VED road tax for cars registered 1/3/01-31/3/17 

VED BandCO2 EmissionsAnnual rateFirst year rate
AUp to 100 g/km£0£0
B101-110 g/km£20£0
C111-120 g/km£30£0
D121-130 g/km£110£0
E131-140 g/km£130£130
F141-150 g/km£145£145
G151-165 g/km£185£185
H166-175 g/km£210£300
I176-185 g/km£230£355
J186-200 g/km£270£500
K*201-225 g/km£295£650
L226-255 g/km£500£885
MOver 255 g/km£515£1,120

*The Band K rate also applies to cars that were registered before 23 March 2006 and have an emissions figure over 225g/km.

Switchover winners and losers

With the switchover to the new road tax rules in 2017, it created a window of two-tier taxation for cars registered around the time of the change. Go for a used car on a 66 or 17-plate that was registered before 1 April 2017, and the tax rate could be vastly different to a 17-plate car registered shortly after that date.

For example, the Peugeot 208 1.2 PureTech (82) has emissions of 104g/km. If you bought one that was registered before 1 April 2017, then you'll pay £20 a year in road tax. However, one registered after that date is subject to the £140 rate of tax, meaning a 700% rise in tax costs.

In most instances road tax will be higher on the later car, especially on those with list prices over £40,000, despite the fact both cars will have the same emissions figures. Conversely, there are a handful of models that actually cost less to tax under the newer system. One particular beneficiary is the Ford Mustang 5.0 V8. If you bought one before 1 April 2017, then you'd be paying £515 a year in road tax, thanks to its emissions figure of 299g/km. After 1 April 2017, and thanks to the Mustang's sub-£40k list price, that drops to £140 a year. However, with the introduction of the facelifted Mustang, Ford raised list prices over the £40k threshold, so it's less of a bargain than before, although £450 is still less than when it was first put on sale.

These are just two extremes of the change in the system, and canny used car buyers will be able to save themselves a few quid in annual road tax by doing a bit of detective work before buying. Just check the exact emissions figure of the car you're looking at and use our table above to see how much you'll pay in road tax, and you could easily reap the benefits by going for a car registered before or after 1 April 2017.

Tax

Road tax for cars registered before 1 March 2001

If you run a car that was registered before 1 March 2001, then it qualifies for another road tax system. This one is simply split into two, and is based on your car's engine capacity:

Cars over 1,549cc: £245 a year
Cars under 1,549cc: £150 a year

You can find out the size of a car's engine by logging on to the DVLA's vehicle enquiry service. All you need is the car's registration, and it will come back with the make and colour of the car before showing information about the engine capacity and other details about the car. If you have the car's V5C registration certificate (logbook), then you can enter the 11-digit reference number which will show you the tax rates for a vehicle. This applies to any car that's been registered and is on the road.

Taking your car off the road

If you are not going to use your car for a long period (anything longer than 6 months) you can use a Statutory Off Road Notification (SORN) to avoid paying road tax while you're not using it. However, off the road means off the road - you can't declare SORN unless you have off-street parking, a garage or some other kind of storage that's away from the public highway. Even if a car is parked in the road for a long period, it needs to have road tax to be parked there - ergo it also has to have an MoT and insurance to get tax in the first place.

You can make a SORN declaration at any time if you have the V5C registration document, or the more common way is to declare SORN when the vehicle's road tax reminder comes through the post from the DVLA. Then you can use the 16-digit renewal code to declare SORN. Once the vehicle has a SORN, you'll get written confirmation in the post, but you won't get any annual reminders about the vehicle's SORN status.

If you declare SORN while there's time left on the current road tax, you can reclaim the outstanding amount and get it refunded, although it will only be for a full month's tax, so from the first of the month after you declare a SORN.

When you want to put your vehicle back on the road, simply tax the vehicle and your SORN is cancelled automatically. The only time you can drive a vehicle that has been SORNed is if you're going to a pre-booked MoT appointment or other vehicle test. Drive it on the road for any other reason, and you could face a fine of up to £2,500.

If you're making a SORN declaration for a vehicle that isn't yours (if the owner has passed away, for example), then you need to apply for SORN by post using form V890 and filling out the relevant information, along with the information needed from the vehicle's V5C registration document.

Classic car road tax

You may have heard that classic cars are exempt from road tax. This is true, although if you own a classic car, it's not simply a case of ignoring the DVLA reminders and going on your merry way. You have to apply for road tax exemption, and depending on the age of your classic car, there are still legal requirements you need to meet.

At the moment, cars, vans and motorcycles that were registered before 1 January 1977 can qualify for road tax exemption. However, the Government put a rolling exemption in place, so cars registered before 1 January 1978 will qualify for exemption, then 1 January 1979, 1980, 1981 and so on.

Owners need to apply for exemption before they can wave goodbye to paying road tax. You can do this at the Post Office as if you're paying road tax, so you'll need the car's V5C registration document, a road tax reminder (if you have one), a valid MoT and proof of insurance. The Post Office will then send your V5C off to the DVLA, who will then amend your V5C and send you an updated logbook within 10 working days. In the meantime, you can still use your classic car.

There are a few more bits of legislation regarding classic cars, depending on the date they were registered:

Classic cars registered from 1 January 1960: If you've applied for road tax exemption, you still need a valid annual MoT and insurance.

Classic cars registered before 1 January 1960: All you need is valid insurance, there's no road tax to pay, and no MoT is needed either.

Whatever car you are looking at, whether you want to know when your own road tax is due, or if you want to find out about a potential used car's tax status and cost, then you can do exactly that at the .

The tax disc

The system for collecting and enforcing road tax was overhauled in 2014, when the Government abolished the tax disc. After 93 years, it was decided that a small circle of paper in your windscreen was no longer necessary, and its abolition made the whole system cheaper to run. There is a catch, however, as you'll find out below.

The current road tax set-up makes it tougher for those seeking to avoid paying road tax. Rather than the visual check that the tax disc made possible, the authorities now rely on number-plate recognition cameras to determine that a vehicle has been taxed.

Although it’s no longer a requirement to display a tax disc in your windscreen, this doesn’t mean you don’t have to pay. The DVLA will send you a reminder when your road tax is up for renewal in the time-honoured fashion, and you can continue to pay your road tax online, over the phone or at the Post Office.

The existing options of paying for 12 or 6 months tax up front are still on offer (for most tax levels), but there’s also the option of paying your car tax monthly. This new monthly option arrives in tandem with the facility to pay your road tax by Direct Debit.

Drivers paying in monthly instalments from a bank account will be subject to a 5% surcharge on top of the road tax price itself. However, that’s less than the 10% premium you'll pay when buying six months of road tax, an option currently used by 23% of motorists. Only the one-off annual payment comes with no extra charges.

The key advantage of paying your car tax by Direct Debit is that the DVLA will continue taking the payments until you tell them to stop. It means that you’ll no longer need to remember to pay your road tax once a year, although of course you still need to ensure that your car has valid insurance cover and an MoT certificate if it's over three years old before you can renew your road tax.

What happens to your road tax when you sell your car?

Under the current car tax system, any remaining road tax you have when you sell your car, it will not transfer to the new owner with the vehicle. Instead, the seller can get a road tax refund on any tax remaining on the vehicle, while the buyer has to pay to re-tax the car.

The tax refund on a sold car will be sent automatically when the DVLA receives notification that the car has been sold, scrapped, exported or taken off the road with a Statutory Off Road Notification (SORN).

Sellers are expected to inform the DVLA of any change of ownership straight away or face a £1,000 fine. If they don’t, they could also still be liable for speeding or parking fines incurred by the new owner.

Information on whether or not a car is taxed is available online via the Government website. All you need is the make and model of the car plus the registration number.

Is there a catch to the Vehicle Excise Duty regime?

So far, so good for the road tax system but as often seems to be the case, there is a catch.

The problem that's getting motorists riled centres around the refund you get on outstanding road tax when you sell your car. When ownership of a vehicle is transferred the previous owner gets a refund on any outstanding road tax, but that refund is calculated from the beginning of the next month. The new owner, on the other hand, has to tax the car anew and their bill is calculated from the beginning of the current month.

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What this means is that the Government effectively collects two lots of tax on the car for the month where ownership is transferred, one from the new owner who pays for that month and one from the previous owner who doesn’t get the tax for that month included in their refund. It's sneaky stuff and should give a useful boost to the exchequer, but at the expense of motorists.