Understand the changes to your car tax band

UK road tax has gone through some serious changes in recent years after a big shake up of the rules in 2017. 

Feeling confused? Read our guide to understand out what road tax band your car falls in and how an increase VED rates in April 2022 will affect how much road tax you’ll need to pay.

UK road tax has gone through some serious changes in recent years after a big shake up of the rules in 2017. 

Feeling confused? Read our guide to understand out what road tax band your car falls in and how an increase VED rates in April 2022 will affect how much road tax you’ll need to pay.

Julie Daniels
Insurance expert
8
minute read
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Last Updated 18 AUGUST 2022

What is car road tax?

Car road tax, officially known as Vehicle Excise Duty (VED), is a tax charged on nearly all cars that are driven or kept on public roads.

How is VED calculated?

The amount of tax you’ll pay depends on when your car was registered for the first time (not when you became the owner if you bought a used car).

That’s because although the rules for calculating VED changed substantially in April 2017, they were not backdated. That means older cars only need to comply with the tax system that was in place when they were registered.

For cars and light goods vehicles first registered before 1 March 2001, VED is based on engine size. You’ll pay one of two rates depending on whether your engine is under or over 1549cc.

For cars registered between 1 March 2001 and 31 March 2017, VED is based on the CO2 emissions and the fuel type of the car. For cars registered on or after 1 April 2017, you’ll pay a different rate of VED in the first year after you register the vehicle, based on your car’s fuel type and CO2 emissions. From the second year, you’ll pay a standard yearly rate depending on your car’s fuel type.

CO2 emissions are measured in the number of grams released into the atmosphere per kilometre (g/km). You can find out how much your car emits on its V5C registration certificate in your logbook, or on the Vehicle Certification Agency.

How much will I pay for car road tax as of April 2022? 

Depending on its first registration date, your car will now fall into one of three VED tax bands, each with its own rules and calculations: 

1. Cars first registered before 1 March 2001 

  • The VED rate you’ll pay is based solely on your engine size, regardless of fuel type or CO2 emissions.
  • With recent increases to VED rates in April 2022, you’ll now pay £180 per year for cars with an engine size of 1549cc or below, and £295 per year for cars with an engine size over 1549cc.
  • These rates also apply for light good vehicles such as vans that were first registered before the 1 March 2001 cut-off. 

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

  • Your car will be put into one of 13 tax bands depending on its CO2 emissions. The bands are lettered from A (less than 100 g/km) to M (over 255 g/km)
  • The higher your car’s CO2 emissions, the more VED you’ll have to pay. If your car is in band A, you won’t have to pay anything. If it’s in band M, you’ll pay £630 in annual road tax for a petrol or diesel car.
  • You’ll pay £10 less per year for an alternative fuel car in the same CO2 emissions bracket as a petrol or diesel car. Alternative fuel cars include hybrids and cars that run on bioethanol or liquid petroleum gas.
  • You can check the cost per band on the Gov.UK tax rate tables

3. Cars first registered from 1 April 2017 

  • For cars first registered on or after 1 April 2017, buyers will pay a first-year rate based on the car’s CO2 emissions, ranging from £0 for zero emission cars, and up to £2,365 for the biggest polluters.
  • Low emission cars (hybrids, bioethanol and liquid petroleum gas) will pay £10 less than petrol and diesel cars in the first year for a car in the same CO2 emissions bracket.
  • Owners of new diesel cars that do not comply with the RDE2 emissions standard will have to pay a higher rate of VED in the first year, so it’s a good idea to check before you buy.
  • From the second year, car owners will pay a standard annual rate based on the fuel type of their car. As of April 2022, petrol and diesel cars will be charged £165, while alternative fuel cars will pay £155.
  • Fully electric cars are exempt from paying road tax, although owners will still need to apply.
  • New cars that cost over £40,000 will also be charged an additional £355 on top of the standard rate for five years from the second time the vehicle is taxed. The £40,000 limit is based on the published list price, so you’ll need to pay this surcharge even if you buy your vehicle at a discounted price. Zero emission vehicles over £40,000 are exempt from this surcharge.

Here's a look at the first year VED rates for petrol, diesel and alternative fuel cars as of April 2022 

CO2 Emissions (g/km)

First-year rate for petrol and RDE2 compliant diesel cars

First-year rate for alternative fuel cars

0

£0

£0

1-50

£10

£0

51-75

£25

£15

76-90

£120

£110

91-100

£150

£140

101-110

£170

£160

111-130

£190

£180

131-150

£230

£220

151-170

£585

£575

171-190

£945

£935

191-225

£1,420

£1,410

226-255

£2,015

£2,005

Over 255

£2,365

£2,355

 

Please note: all VED rates in this guide reflect the price for a single annual payment. You will pay more VED over the year if you choose to spread your road tax payments into biannual or monthly payments.

Which vehicles are exempt?

The following types of vehicle are exempt from VED, although you still need to apply for VED even if you don’t need to pay anything:

  • Electric vehicles– to be exempt, the electricity that powers your electric car must come from an external source or an electric storage battery not connected to any source of power when the vehicle is moving.
  • Disabled vehicles – if you have a disability you may be exempt from paying VED, although you’ll still have to apply for it. Find out if you’re eligible for VED tax exemption on the Gov.UK website. You do not need to pay road tax on mobility scooters or powered wheelchairs.
  • Classic vehicles – if your vehicle is more than 40 years old, it will be considered a classic car, and will be exempt from paying VED.
  • SORN vehicles – if you’ve declared your car off the road and have a Statutory Off Road Notice (SORN), you won’t need to tax or insure your car, and you may be due a car tax refund. Just make sure your car is kept on private land or in a garage and is not driven or parked on a public road.
  • Vehicles used for agriculture, horticulture and forestry including mowers, tractors and agricultural vehicles that are used off-road on private land.

How do I pay for VED?

You can pay for VED online or at the Post Office. You’ll need a reference number from either:

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

If you’re paying at the Post Office, you’ll also need to show a valid MOT certificate.

How can I keep my car costs down?

If you’re in the market for a new car, you could save on your road tax by opting for a car with lower CO2 emissions. Otherwise, while you may not be able to control the cost of VED or other car running costs such as repairs and fuel, there are practical ways to reduce the cost of your car insurance.

Frequently asked questions

Did VED rates rise in April 2022?

Yes, as announced in the 2021 Autumn Budget, VED rates for cars, motorcycles and vans rose in April 2022 in line with the Retail Prices Index (RPI). Because the increase is linked to inflation, the government has been careful to note that it’s not a rise in real terms. But that’s likely to be of little comfort to British motorists amid the wider cost of living crisis.

How is VED calculated for motorcycles?

ED or road tax for motorcycles is calculated according to engine size only: 

Engine size (cc)

VED single 12-month payment

150 or under

£22

151-400

£47

401-600

£73

Over 600

£101

 

New to two-wheeling? Get all the information you need to get on the road with our guide for new bikers.

How is VED calculated for vans?

Road tax for vans registered on or after 1 March 2001 is calculated based on when the van was first registered and how it complies with Euro Emissions Standards. Vans and other light goods vehicles registered before 1 March 2001 fall under the same tax system as cars first registered in that time, with a standard annual rate charged depending on engine size. 

For more details on VED for vans and what classifies as a van for road tax purposes, read our guide to taxing a van to.

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

When you sell your car, you can get a tax refund for any remaining road tax you have paid for that vehicle. The road tax you have paid is not transferable. The new owner will have to pay road tax on their new car before they can drive it. You should tell the DVLA straight away when you sell your car, and they can automatically arrange for your refund.

What happens if I don’t tax my car?

The DVLA will automatically send you a reminder when your car road tax is due, and if you fail to pay on time, they will send you a fixed penalty notice of £80. This fine will be reduced to £40 if you pay your bill within 33 days. If you’re not using your car and you don’t want to pay tax or insurance, you’ll need to officially declare your car as off the road

If you’re caught driving an untaxed car you will be issued an out of court settlement (OCS) letter with a fine of £30, plus one and half times the amount of outstanding road tax to be paid. If you fail to pay that fine you can be taken to court and fined either £1,000 or five time the amount you owe in tax, whichever is greater.

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