Current UK Car Tax Rates and Guidelines
Car tax is payable by the Driver and Vehicle Licensing Agency (DVLA) on most petrol, diesel, hybrid and alternative-fuel vehicles. Rates are based on CO2 emissions and the list price of the vehicle.
Many websites and apps can be used to determine how much your vehicle will cost to tax. However, we recommend that you use the official DVLA website for up-to-date information. The Vehicle Excise Duty (car tax) rates in the UK depend on various factors, including the vehicle’s CO2 emissions and type (petrol, diesel, alternative fuel, etc.).
Vehicle Excise Duty (VED)
Vehicle Excise Duty (VED) is a tax paid by the owners of cars, motorbikes and vans registered in the UK. It is also known as road tax, a government-set fee updated annually.
The rate you pay depends on:
- The type of car you have,
- Its emissions levels and
- When it was first registered.
You can check the current VED rates on the Driver and Vehicle Licensing Agency’s website and find out if you are eligible for any exemptions.
Since 1 April 2017, the system for taxing new vehicles has changed to be based primarily on carbon dioxide emissions. This is a change from the previous system, where a standard rate was charged each year regardless of the car’s emission levels. The change was made in response to falling CO2 levels, which meant many motorists needed to pay more or no tax.
The amount you pay for the new VED system depends on your car’s official CO2 tailpipe emissions – this figure is found on your V5c registration document – and its list price when it was first registered. The more efficient your car is, the lower its emissions and the less VED you will pay. Zero-emission electric cars are exempt from VED, while plug-in hybrids and other alternative fuel cars pay a reduced rate.
| Car Taxes UK |
| CO2 emissions |
Diesel cars (TC49) that meet the RDE2 standard and petrol cars (TC48) |
Alternative fuel cars (TC59) |
All other diesel cars (TC49)
|
| 0g/km |
£0 |
£0 |
£0 |
| 1 to 50g/km |
£10 |
£0 |
£30 |
| 51 to 75g/km |
£30 |
£20 |
£130 |
| 76 to 90g/km |
£130 |
£120 |
£165 |
| 91 to 100g/km |
£165 |
£155 |
£185 |
| 101 to 110g/km |
£185 |
£175 |
£210 |
| 111 to 130g/km |
£210 |
£200 |
£255 |
| 131 to 150g/km |
£255 |
£245 |
£645 |
| 151 to 170g/km |
£645 |
£635 |
£1,040 |
| 171 to 190g/km |
£1,040 |
£1,030 |
£1,565 |
| 191 to 225g/km |
£1,565 |
£1,555 |
£2,220 |
| 226 to 255g/km |
£2,220 |
£2,210 |
£2,605 |
| Over 255g/km |
£2,605 |
£2,595 |
£2,605 |
First-Year Road Tax
Buying a new car will have to be taxed, usually done at the time of purchase. DVLA offer monthly or six-monthly direct debit payments for those who want to spread the cost, but this does cost slightly more. It is also possible to pay annually. You should change your payment method if you change your vehicle or sell it, as the DVLA will cancel the direct debit automatically.
The system of how a car is taxed changed on 1 April 2017 and all cars are classed according to their carbon emissions. However, if you buy a car registered before this date, it will still be subject to the old system of first-year showroom tax based on the CO2 emission level and a flat standard rate from year two onwards.
You can use online car tax calculators to check how much a car will cost to tax. You input the make, model and specification or the registration number, and the tool will run a search against DVLA’s database to show the results of the car tax you would need to pay. There are also apps which will do the same but are more user-friendly. It is important to note that electric vehicles are exempt from road tax until 2025.
Second-Year Road Tax
A few years ago, falling CO2 emissions meant many cars paid little or no road tax. This cost the Treasury millions of pounds in lost revenue, prompting the Government to make some changes.
Now, most drivers pay a flat rate of £165 a year if their car is first registered after April 2017 (it’s £170 for AFVs). Electric and hybrid cars also get a £10 annual discount. Drivers of expensive cars are still liable to pay a wealth tax – an additional annual supplement of £355 on cars with a list price (not the price you paid) of more than £40,000. This continues until the vehicle is six years old and moves to standard annual road tax rates.
Motorists can pay their road tax annually, every six months or through monthly direct debit. If you pay monthly, the DVLA charges a small extra for this. It’s worth noting that any unexpired road tax is not transferable if you sell or write off your car, so be sure to make arrangements with the new owner if you plan to do so. You can check the tax status of your car quickly online, using its registration number. You can also register to receive a reminder from the DVLA when it’s due for renewal.
Third-Year Road Tax
Car tax is complicated, and the exact cost will vary depending on when your vehicle was first registered. If it were new from April 2017, you’d pay a different fee than cars registered before this date because the old CO2 regime was found to be too successful in boosting road tax revenues, with some drivers paying almost no duty.
There is now an annual fixed payment for petrol and diesel cars of £180, although hybrids can get a discount. Electric vehicles currently pay a flat rate of £0, although this is due to change in 2025 when rates are set to be equalised with petrol and diesel cars. A ‘luxury car supplement’ of £390 applies to cars with a list price of more than £40,000, which also increases in line with inflation.
It’s possible to pay this in one annual lump sum, or you can opt for a monthly Direct Debit, though the latter will incur a slight 5% surcharge. You can even pay every six months, but this will require you to fill out a form and have it signed by your bank or building society, who will then be authorised to make monthly deductions on your behalf. If you’re buying a used car, the current holder must transfer any unexpired road tax before you can drive it away.
UK Car Tax Rates – Other useful links from our Knowledge Centre:
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Other useful links from our Knowledge Centre:
How to Manage Business Finances Correctly and Efficiently
Unlocking Business Potential: Strategies for Long-term Success
The Impact of Sustainability on Ecommerce Businesses
Remember to Compare Your Business Costs is here to help your business every step of the way from business advice, or saving you time and money on your business purchases such as: