Vehicle Excise Duty - how much tax will you pay each year?
How much road tax will you be paying after the 2015 budget?
Officially called Vehicle Excise Duty (VED), car tax is the annual payment we make to the government in order to drive or park our cars on the road. It's usually not the largest expenditure involved in running a car, but it can be a key consideration when deciding which car to buy — the amount you pay ranges from zero to about £500. But what determines that amount and does the tax always stay the same?
In the 2015 Summer Budget, it was announced that VED would be effectively ringfenced
New car tax rates
The rates are based on the amount of carbon dioxide (CO2) your car emits over every kilometre it travels. The more your car pollutes the environment, the more you'll pay in VED. If your car is electric, a hybrid or has sub-100g/km CO2 emissions, you might even pay nothing at all.
The following table is based on the tax rates announced as part of the budget on 18 March 2015. These rates are valid from 1 April 2015.
|CO2 Emissions in g/km (tax band)||Annual rate|
|Up to 100 (A)||£0|
|Over 255 (M)||£505|
Cars first registered before 1 March 2001 are taxed in a different way, based on how big their engines are – the bigger the engine, the higher the tax.
You can pay the tax in a variety of ways, including monthly and six-monthly schedules. Since 1 October 2014, drivers no longer need to display a tax disc in their windscreen, as the whole system has become electronic.
If you're buying a new car then your first year's tax could be different to all subsequent years. Generally, this is absorbed in the cost of buying the car, which is why dealers and car publications refer to an "on-the-road" or "OTR" price.