UK road tax 2023/2024: VED tax rates and bands explained

We explain how the current Vehicle Excise Duty (VED) system works, what it means for UK motorists and how to check the cost of taxing your car

road tax

Commonly known as ‘car tax’ or ‘road tax’, the Vehicle Excise Duty (VED) system is split into two parts. A new car’s tax cost can range from £0 to £2,605 in the first year depending on its CO2 emissions. All cars then move to a flat annual rate for the second year onwards. Depending on how you pay your car tax, you’ll need to renew it every six to 12 months.

For drivers of petrol and diesel cars registered after 1 April 2017, the flat annual rate is currently £180, and for alternatively fuelled cars (including mild-hybrid, hybrid, plug-in hybrid, bioethanol or LPG) the rate is discounted to £170. For cars with a list price of £40,000 or more, an extra £390 tax is applied for five years from the second time the car is taxed – usually at the end of the first year. Electric cars don’t currently pay VED, even if the new list price is above £40,000.

This is set to change in 2025 – when electric vehicles registered between 1 April 2017 to 31 March 2025 will be eligible for the standard rate of tax – currently £180. Zero emissions vehicles with an OTR (on the road) price of over £40,000 will also have to pay the supplemental VED charge for expensive cars – worth considering if you’re looking to buy an EV within the next year or two.

Top 10 best cheap cars 2023Top 10 best cheap cars 2023

So, how much is UK road tax per year? We’ve listed annual and six-monthly VED charges for 2023 below. It’s worth noting, however, that if you want to pay on a monthly basis via direct debit then you’ll have to pay a small additional fee.

Annual Vehicle Excise Duty

It’s rare that a year goes by without VED increasing, and rates did increase from April 1 2023. The annual flat rate of road tax, previously £165 for petrol and diesel cars registered from April 2017, went up to £180 per year to account for inflation.

The annual flat rate of road tax for hybrid vehicles, including mild hybrid and plug-in hybrids (PHEV), increased from £155 to £170 – a £10 discount over the standard rate for petrol and diesel cars. This is referred to as the Alternative Fuel Vehicle (AFV) rate, and it also applies to cars powered by bioethanol or LPG (liquid petroleum gas).

Calculating the tax you would pay on a brand new car can seem daunting, so the government has provided a useful car tax price checker tool.

The £40,000-plus car tax surcharge

There’s a VED surcharge payable on cars costing more than £40,000 when new, which stands at £390. This cost must be paid annually on top of the standard flat rate. This is payable for five years from the second year of registration; at six years old, the car reverts to the standard flat rate. Zero-emission cars are exempt from this charge until 2025.

2023 annual VED flat rates for cars registered after April 2017

Tax class

12 months

6 months

Petrol/diesel cars

£180

£94.50

Alternative Fuel Cars

£170

£89.25

Including £390 luxury car tax surcharge

 

 

Petrol/diesel cars

£570

£299.25

Alternative Fuel Cars

£560

£294

 

2023 first year VED rates

Car-tax rates are currently used as a way to incentivise the purchase of greener cars. 

The first-year rates start from £0 for zero-emission cars and AFVs that emit less than 50g/km of CO2. The most polluting cars are hit the hardest, with those emitting 255g/km of CO2 or more costing £2,605 in the first year. All other models fall somewhere between the two extremes.

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It’s worth noting that while a first-year rate of more than £2,500 might sound like a lot, this cost is factored into the car’s ‘on the road’ price, which includes registration fees, number plates, and delivery costs.

Compared to the first-year rates for petrol cars and diesel cars that meet RDE2 emissions standards, AFVs are eligible for a £10 discount. Diesel cars that don’t meet RDE2 emissions (meeting this standard was mandatory from 1 Jan 2021, so only unregistered diesel cars built before this date) pay more on a sliding scale.

First year VED bands for cars registered after 1 April 2021

 

Petrol and RDE2 diesel cars

Non-RDE2 diesel cars

Alternative Fuel Cars

g/km CO2

12 months

12 months

12 months

0

£0

£0

£0

1-50

£10

£30

£0

51-75

£30

£130

£20

76-90

£130

£165

£120

91-100

£165

£185

£155

101-110

£185

£210

£175

111-130

£210

£255

£200

131-150

£255

£645

£245

151-170

£645

£1,040

£635

171-190

£1,040

£1,565

£1,030

191-225

£1,565

£2,220

£1,555

226-255

£2,220

£2,605

£2,210

Over 255

£2,605

£2,605

£2,595

How to check car tax online – is my car taxed?

The increases may have been relatively modest for the 2022 tax year (also currently applicable through 2023) but there’s no escaping the fact that some buyers face eye-watering road tax bills. That’s why it’s important to check what a prospective purchase will cost you in tax for the time you plan to own it. 

If you’re taxing a used car, the Driver and Vehicle Licensing Agency (DVLA) website allows you to check how much you need to pay by registration number, so you can avoid being caught out. You might save a packet buying a used or nearly-new car that once cost more than £40,000, but if you do, you’ll be stung for the higher-rate road tax.

While business drivers don’t usually have to pay their own road tax, they do need to know about Benefit-in-Kind (BiK) rates. BiK is the reason electric and plug-in hybrid cars are so popular for business users; these are the figures used to calculate company-car tax and we've created a guide to how the system works.

Car tax rates for older cars

Owners of older cars continue to pay annual road tax as per the rules of the previous tax structures, albeit with a slight rise due to inflation. The previous systems were split into two separate periods; cars registered between 1 March 2001 to 31 March 2017 were taxed based on CO2 emissions – meaning the most polluting models can cost upwards of £600 per year to tax. Zero and low emissions cars are in band A, which is currently free. In 2025 these cars will move to band B, which currently costs £20 per year.

Cars registered before 1 March 2001 were taxed based on engine size, however, and are more affordable to tax. For these aforementioned reasons, it’s really important to consider when you car was registered, especially if you’re buying used.

VED rates for 2001 to 2017-registered cars

  

Petrol and diesel cars

 

Alternative Fuel Cars

 

Band

g/km CO2

12 months

6 months

12 months

6 months

A

0-100

£0

-

£0

-

B

101-110

£20

-

£10

-

C

111-120

£35

-

£25

-

D

121-130

£150

£78.75

£140

£73.50

E

131-140

£180

£94.50

£170

£89.25

F

141-150

£200

£105

£190

£99.75

G

151-165

£240

£126

£230

£120.75

H

166-175

£290

£152.25

£280

£147

I

176-185

£320

£168

£310

£162.75

J

186-200

£365

£191.63

£355

£186.38

K

201-225

£395

£207.38

£385

£202.13

L

226-255

£675

£354.38

£665

£349.13

M

255+

£695

£364.88

£685

£359.63

VED tax bands for cars registered before 1 March 2001

If your present car was registered before 1 March 2001, it most likely falls into one of two bands based on engine size, making it easy to work out your annual bill.

If your car has an engine less than 1,549cc in capacity, it’s liable for annual VED of £200. Meanwhile, if you have your sights set on an older car registered before 1 March 2001 with an engine larger than 1,549cc, the cost of tax is set at £325. The same car registered after that could easily cost twice as much in tax.

The reason we say “most likely” is because since 1 April 2017, all cars more than 40 years old are considered to be historic vehicles and so are exempt from VED. You’ll need to renew its road tax once a year, but there will be nothing to pay.

Driving without tax

If you’re caught driving a car without road tax, you could receive a severe fine. If you’re stopped by police at the roadside, they have the power to confiscate your vehicle. You can check if your car is taxed on the DVLA’s website to make sure.

When buying a new or used car, you need to tax it before driving away, as there’s no ‘grace period’. You can tax a car instantly online or by calling the DVLA, ensuring you have the logbook (V5C) or new keeper slip (V5C/2) handy so you can obtain the vehicle’s unique reference number. If you have a car you want to keep in storage and not drive, you can cancel its road tax by making a SORN (Statutory Off-Road Notification), which is valid for 12 months.

Road tax refund

The disappearance of the tax disc in 2015 brought with it a significant change; previously, if the tax disc of a car for sale hadn’t yet expired, it could be sold along with the car. With tax already in place, this made it simple for a buyer to simply arrange insurance over the phone to drive away legally in their new car.

It’s no longer possible for road tax to be transferred to a subsequent owner. Instead, it’s up to the owner to apply for a refund of any remaining tax (allow up to six weeks for it to be processed). It’s also up to the buyer to tax the car themselves immediately; you can do this online through a relatively simple process and it’s still possible to visit a Post Office to arrange your car tax.

Pay road tax online

It's now possible to pay your road tax with a monthly Direct Debit, though doing so will cost slightly more than paying upfront. The annual and six-monthly payment options continue, again for a small extra charge. The DVLA automatically sends out renewal reminders (called V11 forms), so remembering to tax your car is easy, despite the fact there are no longer tax discs. V11 forms also have a Direct Debit form to fill in on the back, which you can then take to a Post Office if you’d rather not pay online.

Planned changes for car tax in 2025 onwards

Zero emission vehicles

Electric and hydrogen cars are currently exempt from paying road tax, however, as of 2025 any car registered from 1 April 2017 to 31 March 2025 will pay standard annual rates of road tax – currently £180 per year. New cars sold from 1 April 2025 will incur the lowest rate of VED in the first year (currently £10), rising to the standard rate in the second year. 

EV buyers of vehicles costing more than £40,000 will be required to pay even more from April 2025. EVs are set to lose the current expensive cars exemption, resulting in an uplift of £355 in the second to sixth years following registration.

Hybrid vehicles

Cars emitting between 1 to 50 g/km will only need to pay £10 for the first year of road tax when registered but will then transition to the standard rate of £180 a year. Vehicles costing £40,000 or more will also need to pay the £390 a year uplift between the second to sixth years on the road.

More on UK car tax...

Richard is a former editor of Carbuyer, as well as sister site DrivingElectric.com, and he's now Deputy Editor at Auto Express. Having spent a decade working in the automotive industry, he understands exactly what makes new car buyers tick.

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