Car tax bands explained

Changes to vehicle road tax, which came into force in April 2021, have led to further increases in Vehicle Excise Duty (VED) for new cars – with higher-polluting diesels being hit the hardest. 

If you’re in the market for a new car, our guide to current car tax bands will help you understand exactly how much VED you’ll need to pay.

Changes to vehicle road tax, which came into force in April 2021, have led to further increases in Vehicle Excise Duty (VED) for new cars – with higher-polluting diesels being hit the hardest. 

If you’re in the market for a new car, our guide to current car tax bands will help you understand exactly how much VED you’ll need to pay.

Alex Hasty
Insurance and finance expert
6
minute read
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Last Updated 21 FEBRUARY 2022

What is car tax?

Car tax is the Vehicle Excise Duty (VED) levied on almost all vehicles by central government. Since 2001, all cars have been charged a rate of road tax when they’re first registered, which is based on their CO2 emissions.

While the latest changes were made in April 2021, VED is set to increase again in line with inflation from April 2022. The exact amount is still to be confirmed, but petrol and diesel owners should brace themselves for a further rise in running costs.

What are the current car tax bands?

Since April 2018, cars have fallen into one of four tax band categories, depending on when they were first registered as a brand-new vehicle. The current 2021/22 tax band rates are as follows: 

1. Cars first registered before 1 March 2001

These older cars will be charged a standard VED rate based on the size of their engine:

  • Less than 1549cc – £170
  • More than 1549cc – £280

2. Cars first registered between 1 March 2001 and 31 March 2017

Depending on the amount of CO2 they emit, cars will fall into one of the 13 tax bands lettered from A (less than 100 g/km) to M (more than 255 g/km). So, a car in band A will pay £0, while a car in band M will pay an annual VED rate of £600.

Alternative fuel cars (hybrids, plug-in hybrids, LPG, CNG, biofuel) that fall into bands A to M pay £10 less than petrol or diesel models in the same band. 

Cars first registered before 23 March 2006 will pay a maximum cap of £340, even if they emit more than 225 g/km of CO2.

You can check what band your vehicle falls into on the DVLA vehicle tax rate tables.

3. Car first registered from 1 April 2017

Petrol and diesel cars first registered on or after 1 April 2017 pay a first-year rate based on the vehicle’s CO2 emissions, then a standard annual rate of £155 from year two onwards.

Alternative fuel cars pay £10 less in the first year, then a standard annual rate of £145 from year two onwards. 

First year rates for petrol, diesel and alternative fuel cars first registered on or after 1 April 2017:

CO2 g/km

Petrol/RDE2 compliant diesel cars

Alternative fuel cars

0

£0

£0

1-50

£10

£0

51-75

£25

£15

76-90

£115

£105

91-100

£140

£130

101-110

£160

£150

111-130

£180

£170

131-150

£220

£210

151-170

£555

£545

171-190

£895

£885

191-225

£1,345

£1,335

226-255

£1,910

£1,900

Over 255

£2,245

£2,235

As of April 2018, VED for cars first registered after 1 April 2017 will not only be based on CO2 emissions but also the vehicle’s value when bought new. 

Vehicles with a list price of £40,000 or more will pay a £355 supplement for the first five years. Zero-emission electric vehicles over £40,000 will no longer have to pay this supplement.

VED from years 2-6 for vehicles registered after 1 April 2017 with a list price of more than £40,000 is:

Fuel type

Annual rate

Supplement

Total

Petrol/diesel

£155

£335

£490

Alternative fuel

£145

£335

£480

Electric

£0

N/A

N/A

4. Diesel cars first registered from 1 April 2018

All diesel cars first registered from 1 April 2018 will have to pay additional road tax in the first year, unless they meet the Real Driving Emissions 2 standard for nitrogen oxide emissions (RDE2). Those that meet the RDE2 standard will pay the same in the first year as their petrol counterparts.

From year two, non-RDE2 compliant diesel cars will pay the same standard annual VED rate of £140, regardless of their CO2 emissions.

First year road tax for non-RDE2 diesel cars registered on or after 1 April 2018 is:

CO2 g/km

Non-RDE2 compliant diesel cars

0

£0

1-50

£25

51-75

£115

76-90

£140

91-100

£160

101-110

£180

111-130

£220

131-150

£555

151-170

£895

171-190

£1,345

191-225

£1,910

226-255

£2,245

Over 255

£2,245

Why are the first year VED rates higher?

Petrol and diesel cars emit CO2 when they burn fuel. These emissions have been widely blamed for global warming and the build-up of greenhouse gases. First year rate increases are the result of inflation rises and a bid by the government to encourage motorists to buy more environmentally friendly vehicles.

Did you know?
In an ambitious step to reduce carbon emissions, the UK Government is planning to ban the sales of new petrol and diesel cars by 2030. The aim is that all new cars and vans will be fully zero emission by 2035. So, could this mean the end of VED in the future or will a new kind of tax replace it?

How can I find out which tax band a vehicle falls into?

To find out the tax band of a vehicle, you’ll need to know its CO2 emissions.

  • You can find the CO2 emissions of a vehicle in its V5C logbook.
  • If you’re looking to buy a new or used car and you want to find out which tax band it will fall into, you can check its CO2 emissions on the Vehicle Certification Agency website.
  • If you’re buying a brand-new diesel car, it will now automatically be RDE2 compliant, so the higher band for the first-year rate will no longer apply. However, you’ll still need to pay the five-year supplement if the list price is more than £40,000, regardless of its CO2 emissions.

What cars are exempt from paying VED?

The following vehicles are still exempt from paying VED:

Just remember, even if your vehicle is exempt and you don’t have to pay anything, you still have to apply for road tax.

If you think road tax is complicated, then at least finding the right car insurance should be easier. Get a quote with us and we’ll show you policies based on price, policy cover level, add-ons or annual or monthly payment terms – helping you decide what’s right for you.

Frequently asked questions

How do I pay my car tax?

You can pay your car tax online at GOV.UK or at your local Post Office. Taxing your vehicle online is much quicker and the service is available 24/7. To tax your car, you’ll need a reference number from either:

  • A recent reminder (V11) from the DVLA.
  • Your vehicle’s V5C logbook.
  • The green ‘new keeper’s’ slip (V5C/2) from your logbook, if you’ve just bought the car.

If you’re paying at the Post Office and your car is more than three years old, you’ll also need a valid MOT certificate.

How often do I need to pay my car tax?

Your car tax is valid for 12 months, so you’ll need to pay it each year. You could also spread the cost by paying monthly, six-monthly or by annual Direct Debit. Just be aware there’s a 5% surcharge if you choose to pay monthly or every six months.

How can I check if my car is taxed?

You can check if your vehicle tax is up to date and when it expires using the DVLA’s vehicle enquiry service. All you need is your car’s registration number.

Should I choose a low-tax car?

If you’re looking to buy new, it could certainly help your running costs if you choose a low or no tax car. Cars that are cheaper to tax also tend to hold their value better, so it’s something to consider if you decide to sell it later on.

While brand-new electric cars are typically more expensive to buy, you’ll have no road tax to pay and running costs will be much cheaper in the long run. 

If you don’t want to stretch to a brand-new electric model, there are plenty of petrol and diesels that fall into the low tax bands. Some popular models may also be cheaper to insure as well as tax.

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