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Comprehensive Guide to Car Tax in the UK (2024)
Understanding how much car tax (Vehicle Excise Duty or VED) you need to pay is essential for every vehicle owner in the UK. This comprehensive guide explains how car tax is calculated, the different rates for various vehicle types, and how you can use our car tax calculator to estimate your costs accurately.
What is Car Tax (Vehicle Excise Duty)?
Car tax, officially known as Vehicle Excise Duty (VED), is a tax that must be paid for most types of vehicles that are driven or parked on public roads in the UK. The revenue from VED goes to the central government and is used to fund road maintenance and other transport-related projects.
The amount of VED you pay depends on several factors:
- Your vehicle’s CO₂ emissions
- The fuel type your vehicle uses
- The vehicle’s list price when new
- When the vehicle was first registered
- Whether the vehicle is a car, motorcycle, or other type
How Car Tax is Calculated in 2024
The current VED system was introduced in April 2017 and applies to most vehicles registered from 1 April 2017 onwards. For vehicles registered before this date, different rules apply.
For Cars Registered on or After 1 April 2017
The VED system for newer cars has three main components:
- First-year rate: Based solely on CO₂ emissions
- Standard rate: Fixed annual rate after the first year
- Expensive car supplement: Additional charge for cars with a list price over £40,000
| CO₂ Emissions (g/km) | First Year Rate (2024/25) | Standard Rate (2024/25) |
|---|---|---|
| 0 | £0 | £0 |
| 1 – 50 | £10 | £0 |
| 51 – 75 | £25 | £25 |
| 76 – 90 | £120 | £120 |
| 91 – 100 | £155 | £155 |
| 101 – 110 | £175 | £175 |
| 111 – 130 | £195 | £195 |
| 131 – 150 | £235 | £235 |
| 151 – 170 | £570 | £570 |
| 171 – 190 | £910 | £910 |
| 191 – 225 | £1,440 | £1,440 |
| 226 – 255 | £1,970 | £1,970 |
| Over 255 | £2,605 | £2,605 |
The expensive car supplement applies to cars with a list price (including optional extras) of more than £40,000. This is an additional £390 per year for 5 years (from the second time the vehicle is taxed).
For Cars Registered Before 1 April 2017
For older vehicles, the VED is based solely on CO₂ emissions and the fuel type. There is no expensive car supplement for these vehicles.
| CO₂ Emissions (g/km) | Petrol Cars | Diesel Cars |
|---|---|---|
| Up to 100 | £0 | £0 |
| 101 – 110 | £20 | £20 |
| 111 – 120 | £35 | £35 |
| 121 – 130 | £165 | £165 |
| 131 – 140 | £185 | £185 |
| 141 – 150 | £215 | £215 |
| 151 – 165 | £580 | £580 |
| 166 – 175 | £610 | £610 |
| 176 – 185 | £645 | £645 |
| 186 – 200 | £700 | £700 |
| 201 – 225 | £1,320 | £1,320 |
| 226 – 255 | £1,505 | £1,505 |
| Over 255 | £1,815 | £1,815 |
Alternative Fuel Vehicles
Vehicles that use alternative fuels (including hybrids, bioethanol, and LPG) receive a £10 discount on their VED rates compared to petrol or diesel vehicles in the same CO₂ band.
For example, a hybrid car emitting 100g/km of CO₂ would pay £10 less in the first year than a comparable petrol car. Electric vehicles (EVs) pay no VED at all, though this may change in future as EV adoption increases.
How to Pay Your Car Tax
You can pay your car tax online through the GOV.UK website, by phone, or at certain Post Office branches. You’ll need:
- A recent reminder (V11) or ‘last chance’ warning letter from DVLA
- Your vehicle log book (V5C) in your name
- The 11-digit reference number from your V5C
- A valid MOT certificate (if your vehicle needs one)
- Valid car insurance
You can pay for 12 months, 6 months, or monthly by Direct Debit. Paying for 12 months upfront is the cheapest option, while monthly payments include a 5% surcharge.
Car Tax Exemptions
Some vehicles are exempt from paying VED:
- Electric vehicles (until April 2025)
- Vehicles used by a disabled person
- Disabled passenger vehicles
- Mobility scooters and powered wheelchairs
- Historic vehicles (over 40 years old)
- Steam vehicles
- Vehicles used for agriculture, horticulture, and forestry
Car Tax for Company Cars
If you have a company car, you’ll pay Benefit-in-Kind (BIK) tax instead of VED. The amount depends on:
- The car’s P11D value (list price including options)
- Its CO₂ emissions
- Your income tax band
The BIK rate for 2024/25 ranges from 2% for electric cars to 37% for the most polluting vehicles. You can find the full rates on the GOV.UK website.
Car Tax for Motorcycles
Motorcycle VED rates are simpler than car tax and are based on engine size:
- Engine size 150cc or less: £22 per year
- Engine size 151cc to 400cc: £44 per year
- Engine size over 400cc: £103 per year
Electric motorcycles are currently exempt from VED.
Car Tax for Vans and Commercial Vehicles
Most vans and commercial vehicles pay a flat rate of £320 per year for petrol or diesel models. Electric vans are currently exempt from VED.
For pickups (dual-purpose vehicles), the rules are more complex and depend on whether the vehicle is primarily for commercial use.
Car Tax and the Environment
The current VED system is designed to encourage drivers to choose lower-emission vehicles. The more CO₂ your vehicle emits, the more tax you’ll pay. This system aims to:
- Reduce overall vehicle emissions
- Encourage the adoption of electric and hybrid vehicles
- Fund improvements to road infrastructure
- Support public transport initiatives
According to research from the International Council on Clean Transportation, the UK’s VED system has been somewhat effective in reducing average CO₂ emissions from new cars, though critics argue it could be more aggressive in incentivizing zero-emission vehicles.
Future Changes to Car Tax
The UK government has announced several potential changes to the VED system:
- Electric Vehicle Tax: From April 2025, electric vehicles will no longer be exempt from VED. They will pay the lowest first-year rate (£10) and then the standard rate (£180) from the second year.
- VED Band Adjustments: The CO₂ bands may be adjusted to reflect improvements in vehicle efficiency.
- Road Pricing: There have been discussions about replacing VED with a road pricing system based on miles driven, though no concrete plans have been announced.
These changes reflect the government’s need to maintain revenue as more drivers switch to electric vehicles, which currently pay no VED.
How to Reduce Your Car Tax
If you’re looking to reduce your car tax bill, consider these strategies:
- Choose a lower-emission vehicle: Cars with lower CO₂ emissions pay less VED. Consider hybrids or electric vehicles.
- Buy used: Cars registered before April 2017 often have lower VED rates, especially for diesel models.
- Avoid expensive cars: Cars over £40,000 incur an additional £390 annual supplement for 5 years.
- Check for exemptions: Some vehicles, like historic cars or those used by disabled drivers, are exempt from VED.
- Pay annually: Paying for 12 months upfront is cheaper than monthly payments.
- Consider alternative fuels: Vehicles using LPG, bioethanol, or hydrogen often qualify for discounts.
Common Car Tax Myths
There are several misconceptions about car tax that can lead to confusion:
- “Car tax pays for road maintenance”: While VED revenue goes to the central government, it’s not ring-fenced for roads. Road maintenance is funded from general taxation.
- “You don’t need to tax your car if you’re not driving it”: If your car is parked on a public road (even if not being driven), it must be taxed unless you’ve declared it off-road with a SORN.
- “Electric cars will always be tax-free”: From 2025, electric vehicles will pay VED, though at reduced rates compared to petrol/diesel cars.
- “You can transfer remaining tax when selling a car”: Since 2014, car tax doesn’t transfer with the vehicle. The new owner must tax the car before driving it.
Car Tax and SORN (Statutory Off Road Notification)
If you’re not using your vehicle and want to avoid paying car tax, you can declare it off-road with a SORN. This means you can’t drive or park it on a public road. To make a SORN:
- Go to the GOV.UK SORN page
- You’ll need your vehicle’s 11-digit reference number from your V5C
- The SORN starts immediately if you’re the current registered keeper
- You’ll get a confirmation letter within 4 weeks
You don’t need to SORN a vehicle if it’s:
- Already taxed
- Being kept by a vehicle trader
- Between registered keepers
Car Tax Refunds
If you sell your car, scrap it, export it, or declare it off-road (SORN), you can get a refund for any full months of remaining car tax. The refund is automatic – you don’t need to apply for it. The refund will be sent to the registered keeper by cheque, usually within 6 weeks.
If you pay by Direct Debit, the payments will stop automatically when you tell DVLA you no longer own the vehicle.
Car Tax for Classic Cars
Classic cars (those over 40 years old) are exempt from VED. This is known as the ‘historic vehicle’ exemption. The 40-year rule is rolling, so each year on 1 April, another year of vehicles becomes exempt.
To qualify, your vehicle must:
- Have been built or first registered more than 40 years ago
- Not have been substantially changed in the last 30 years (though repairs and like-for-like replacements are allowed)
You still need to tax the vehicle (even though it’s free) and it must meet all other legal requirements like MOT (if applicable) and insurance.
Car Tax and MOT
You can’t tax your car without a valid MOT certificate (if your vehicle is over 3 years old). The MOT checks that your vehicle meets road safety and environmental standards.
You can check your MOT status and history on the GOV.UK MOT check service.
Car Tax for Imported Vehicles
If you import a vehicle from outside the UK, you’ll need to:
- Register and tax it with DVLA before driving it on UK roads
- Get the correct insurance
- Get an MOT if the vehicle is over 3 years old
The VED rate for imported vehicles is based on the same CO₂ emissions rules as UK vehicles. You may need to get the CO₂ emissions officially confirmed if they’re not already documented.
Car Tax Enforcement and Penalties
Driving without valid car tax can result in:
- A fine of £80 (reduced to £40 if paid within 28 days)
- Your vehicle being clamped or impounded
- A court prosecution with a maximum fine of £1,000
ANPR (Automatic Number Plate Recognition) cameras are used extensively to catch untaxed vehicles. If your vehicle is clamped, you’ll need to pay a release fee of £100 plus any outstanding tax.
Frequently Asked Questions About Car Tax
How do I check if my car is taxed?
You can check your vehicle’s tax status on the GOV.UK vehicle tax check service. You’ll need your vehicle’s registration number.
Can I drive my car while waiting for tax to be processed?
No. You must wait until the tax is confirmed before driving. If you tax your vehicle online, it’s usually updated immediately. If you’re waiting for a new V5C (log book), you can tax your vehicle using the 11-digit reference number from your last V5C or the green ‘new keeper’ slip.
What happens if I forget to tax my car?
If you forget to tax your car, you’ll receive a late licensing penalty of £80 (reduced to £40 if paid within 28 days). If you continue to drive without taxing your vehicle, you risk having it clamped or impounded, and you may face court prosecution with fines up to £1,000.
Do I need to tax my car if it’s not being driven?
If your car is parked on a public road, it must be taxed even if you’re not driving it. The only exceptions are if you’ve declared it off-road with a SORN or it’s exempt from VED. If it’s on private property, you don’t need to tax it, but you should consider making a SORN to avoid any issues.
How is car tax different from road tax?
“Road tax” is an outdated term that many people still use to refer to Vehicle Excise Duty (VED). The name was changed because the revenue from VED doesn’t specifically fund roads (it goes to the general treasury). However, in everyday conversation, people often use “road tax” and “car tax” interchangeably to mean VED.
Can I get a discount on car tax?
The only discounts available are for alternative fuel vehicles (£10 discount) and exemptions for certain vehicle types (like electric cars until 2025 and historic vehicles). There are no general discounts based on income, age, or other personal factors.
What is the most expensive car tax band?
For cars registered after April 2017, the highest tax band is for vehicles emitting over 255g/km of CO₂. These vehicles pay £2,605 in the first year and £180 annually thereafter (plus the £390 supplement if the car cost over £40,000 new).
Do hybrid cars pay less tax?
Hybrid cars generally pay less tax than equivalent petrol or diesel models because they typically have lower CO₂ emissions. They also qualify for the £10 alternative fuel discount. However, the exact amount depends on the specific vehicle’s emissions – some hybrids (particularly plug-in hybrids with large batteries) can qualify for very low tax rates.
Conclusion
Understanding car tax is essential for every vehicle owner in the UK. The system can be complex, with different rules for vehicles registered before and after April 2017, various exemptions, and additional charges for expensive cars. Using our car tax calculator can help you estimate your costs accurately based on your specific vehicle.
Remember that car tax is just one cost of vehicle ownership – you’ll also need to consider fuel costs, insurance, maintenance, and potentially congestion charges or low emission zone fees if you drive in certain areas.
As the UK moves toward net-zero emissions, we can expect further changes to the car tax system, particularly regarding electric vehicles. Staying informed about these changes can help you make smarter decisions when buying and running a vehicle.
For the most accurate and up-to-date information, always check the official GOV.UK vehicle tax pages or consult with a vehicle tax specialist if you have complex questions about your specific situation.