If you want to enjoy the privilege of driving on Britain's roads, you will need to license your car. In government-speak, this is called the "vehicle excise duty," or more colloquially the road tax. However, this is far from being a simple system where one rate applies to all. The tax does vary, based on the age of the vehicle, engine size and type, and emissions capability. So, if all you want to know is "how much is my car tax," you may need to make some calculations first. What do you need to consider?
Who Has to Pay Car Tax?
In brief, the person registered as the keeper of the vehicle has to pay the excise duty. Alternatively, they have to send a notification to the DVLA (known as a SORN) to register that they are not using it on the road. Almost all vehicles are subject to this tax, but there are some exceptions (see below).
How Much Is Road Tax for My Car?
Car tax rates relate to the engine size, fuel type, emissions of CO2 and the first date of registration.
If someone first registered the vehicle before March 1, 2001, the tax payable links to the engine size.
For cars registered after that date, the amount payable relates to its fuel type and CO2 emissions.
The government tinkers with these rates quite often and brought into force a new set of changes in April 2020. Regulators adjusted the current rates for inflation and came up with a new tariff based on the "worldwide harmonised light vehicle test protocol."
When a car is brand-new and ready to take to the streets, vehicle excise duty is due for the first time. This fee will often be rolled into the cost of the vehicle by a dealer, and they will typically take care of the registration. Most people accept that this is part of the "on the road" cost for the new car but the rates charged here will be different to the tax you pay from year two onwards.
The initial tax payment varies according to the vehicle's carbon dioxide emissions. The rate will be slightly more for diesel cars unless they meet the latest emission standards, also known as RDE2 (Real Driving Emissions). The manufacturer of the vehicle uses this test to determine its emissions level during a road test.
The government will insist that all new cars go through this test after January 2021, and if you buy a diesel after that date, then your vehicle excise duty will be the same as if it were a petrol-engined car.
The rates will steadily rise as the emissions increase (defined as grams per kilometre of CO2). If your vehicle emits more than 255 units on that scale, you will pay a whopping £2,135 for your VED!
You can see the full tax table here.
How Much Is My Road Tax after the First Year?
Once the vehicle is on the road, things become a little simpler. In this case, you will need to pay a flat rate of £150, although you can get a slight discount if you drive a hybrid vehicle of some kind.
If, however, your car costs more than £40,000, you have to throw a bit more into the pot. In this case, you will be liable for a £325 supplement for five years, starting with your second payment. After that, you go back to the standard rate which is currently £150 a year, but which will probably be somewhat more by that time.
This latest method of taxing vehicles came into force in 2017. If you have a car that you first registered between March 1, 2001, and March 31, 2017, a different regime applies. Here there are 13 separate tax bands based on CO2 emissions, but the tax itself is a lot lower. For example, the maximum that you would pay here for a vehicle that emits more than 255 g per kilometre is £580 per year.
And if you have an even older car, things are simpler still. You will pay £270 per year for a vehicle that has an engine larger than 1549 cc and £165 per year for something smaller.
How Much Is Car Tax by Registration?
You can check to see if a vehicle is currently taxed, is supposed to be off the road or has an MOT by entering the registration number here.
How Do I Pay Car Tax?
You can pay by direct debit, or by using a credit or debit card. You will need the vehicle logbook (V5C), or a reminder letter from the DVLA (V11). If you've just bought the vehicle, you will need the appropriate slip from within the logbook, and if you don't have a logbook, you'll have to apply for a new one first.
How Much Is Raised?
According to the Department for Transport, there are 44.4 million vehicles registered for use on the road in the United Kingdom (2019). This database allows the government to raise £6.4 billion through a vehicle excise duty alone.
You will be interested to know that the DfT pulls in a great deal more from fuel tax, however, with just under £28 billion earmarked for the Treasury coffers.
What Is My Car Tax Used for?
Vehicle excise duty would typically find its way into the "Consolidated Fund." Until very recently it was treated as a general tax and could, theoretically, be used to pay for a variety of different services. However, the government has now created a fund for the improvement of roads throughout England. A certain amount of the vehicle excise duty will, therefore, be ring-fenced for this purpose.
Who Is Exempt?
Very few people are exempt when it comes to paying road tax. You may be eligible if disabled or if your vehicle carries disabled passengers, or is a historic vehicle. Fully electric cars are also exempt as they are, of course, emissions-free.
While the various bands may seem confusing, you can quickly work out your car tax obligations by visiting the government website.