A simples guide

What is vehicle excise duty (VED)?

When is a road tax, not a road tax? When it’s a vehicle excise duty of course. Proper ‘road tax’ as in a tax to repair and fund road building was abolished in 1937; it was replaced by ‘vehicle excise duty’ which is essentially a tax on the car you drive. But if it’s not a giant pot hole fund, where does it go, and more importantly, how much is it and when do you have to pay it?


What does VED mean for me today then?

If you have a car and you drive it or have it parked on a public road, you’ll need to pay VED every year; the amount you pay will depend on when your car was registered. If it was registered before 1 March 2001 then it’s based on engine size, so if you’ve got a small one (1549cc or less) then you’ll pay £145 for the year. If yours is slightly bigger (over 1549cc) then you’ll pay £235 for the year and if you pay by monthly instalments, you’ll pay a bit more for the privilege.

If your car was registered on or after 1 March 2001, the amount of VED you pay will be determined by your car’s fuel type and CO2 emissions (that’s the nasty stuff it coughs out of its exhaust). Emissions are measured in grams per kilometre and shown as g/km. Your V5C registration form will tell you how much the emissions are so there’s no need to don your boffin specs and white coat in order to find out.

There are 13 bands within the vehicle tax hierarchy, split from A to M. If you own a petrol or diesel car, you’ll pay £10 more per band than someone who owns an ‘alternative fuel’ car such as LPG or a hybrid.

Cars registered after April 2010 will also be charged a ‘first year rate’ of car tax, so you’ll pay more car tax for the year in which your car was registered. But don’t worry that doesn’t last forever, you’ll pay the standard rate of tax for all subsequent years. And because we like to be really helpful, here’s a table to show you exactly how much cash you’ll need to part with (no need to thank us):


CO2 emission (g/km)

Single 12 month payment


Up to 100






















£210 (£300 for first year rate)



£230 (£355 for first year rate)



£260 (£500 for first year rate)



£295 (£650 for first year rate)



£500 (£885 for first year rate)


Over 255

£515 (£1,120 for first year rate)

*Includes cars with a CO2 emission over 225g/km but were registered before 23 March 2006

As painful as it might be to part with the full amount of car tax in one go, if you pay in monthly instalments, you’ll end up paying more in the long run.

VED is not transferrable so if you sell your car, you’ll need to claim a refund on any remaining months you have. The new owner will need to tax the car for themselves.

So where does my car tax actually go?

The money you pay in VED goes straight into the coffers of the Exchequer and from there, it’ll get spent on whatever the government sees fit such as hospitals and education. Only a quarter of the money raised by VED is actually spent on the roads (which is why that pothole you’ve been avoiding is still there). Although the government has promised that future payments will go towards an old fashioned ‘road fund’ in order to bring our highways back up to scratch (apparently they’re ranked worse than roads in3rd world countries).


Are there any exemptions to VED?

Cars that are 40 years old or more from the 1 January in any given year are exempt from VED (so from 1 January 2016 vehicles made in 1976 will be exempt, in 2017 that will include cars made in 1977 and so on).

Some vehicles that are used by the disabled are also exempt. You also won’t need to pay VED on mobility scooters and powered wheelchairs and you can heave a sigh of relief if you’ve got anything that’s powered by steam, because they’re exempt too.

cars on driveway

What about a SORN?

A SORN is a ‘statutory off road notification’ and if you’re taking your car off the road for a bit, you’ll need this in order to stop paying VED. You can only apply for a SORN if your car is parked on a private driveway, land or in a garage (so even if you’re not using it but it’s parked on a public road you’ll need to tax it). Basically, if you own a car you’ll either need to tax it or SORN it.

Changes from April 2017

Just when you thought you’d got your head around what VED is, the government are shaking it all up again. Any cars registered from 1 April 2017 will pay their first year of VED based on their CO2 emissions. After that first year, all cars will pay a flat standard rate of £140 each year, the exception will be zero emissions cars for which VED will be £0.

And if you like flash motors then you’re going to need to call your Swiss banker because any cars with a list price of £40,000 or more will pay a supplemental £310 each year for five years on top of the standard £140. Cars already registered before 1 April 2017 won’t be affected. Here are the new VED rates for April 2017:

CO2 emissions g/km

First year rate of car tax

Standard rate payable after first year*





































Over 255



*cars listed at £40,000 or more pay an additional £310 for five years

How do I pay my VED and what happened to those funny little disc things?

The easiest way to pay for VED is online at Gov.UK, tax your vehicle alternatively you can call 0300 123 4321 or go to the Post Office if you like to do it the old fashioned way. And those funny little paper discs? They were scrapped in October 2014 and all taxed cars are now on a national register but if you’ve got any old ones they’d make great coasters.

What else do I need to know?

On top of car tax, you’ll need your car insurance (nobody said owning a car was cheap). But that’s something we can help you with, just tell us a bit about you and your car and we’ll do the searching for you, with more than a hundred trusted car insurance providers, we’ll have you covered at comparethemarket.com.

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