Car tax band guide: How much is car tax?

Car tax band guide: How much is car tax and how is it calculated?

Owning and running a car can be expensive, and car tax is often one of those forgotten costs that can be overlooked. How much you pay in car tax is also complicated by the type of vehicle you drive and how old it is. Let us take you through the ins and outs of car tax, how its calculated and how to work out your car tax band.

What is car tax?

Car tax is a tax for parking and driving our vehicles on public roads in the UK. The formal name of the tax is Vehicle Excise Duty (VED) and is also sometimes known as vehicle tax or road tax.

Why do we pay car tax?

Vehicle tax was first introduced in 1888, before being updated in 1920 so that is applied specifically to motor vehicles. Until 1965, car tax was handled by local government authorities, until the DVLC (Driver and Licensing Vehicle Centre) was established, taking responsibility of all vehicle and driver registration matters. The DVLC later became the DVLA (Driver and Vehicle Licensing Agency), the organisation based in Swansea who are responsible for vehicle registration, driving licenses and vehicle excise duty.

Where does car tax go?

Each year, the DVLA collects between £5b-£6billion in car tax, but not all of this is spent on road improvements and infrastructure. In fact, car tax is grouped in with other forms of tax, meaning the income from your road tax is just as likely to be spent on education or healthcare as it is on roads.

How much is car tax and how is it calculated?

How much you pay in car tax is dependent on the type of vehicle and its age. Car tax can be calculated by separating it into 3 main types – cars registered after April 2017, cars registered between March 2001 and April 2017, and cars registered before March 2001.

Car tax bands for cars registered after April 2017

Cars registered after April 2017 with 0g/km CO2 emissions are exempt from paying road tax, whilst all other vehicles are required to pay the following amount of tax –

CO2 emissions (g/km) First year rate Standard rate*
0 £0 £0
1 – 50 £10 £140
51 – 75 £25 £140
76 – 90 £100 £140
91 – 100 £120 £140
101 – 110 £140 £140
111 – 130 £160 £140
131 – 150 £200 £140
151 – 170 £500 £140
171 – 190 £800 £140
191 – 225 £1,200 £140
226 – 255 £1,700 £140
Over 255 £2,000 £140

*Cars with a list price of over £40,000 when new, pay an additional rate of £310 per year on top of the standard rate, for five years.

Car tax bands for cars registered between March 2001 and April 2017

Cars registered between March 2001 and April 2007 with 0 -100g/km CO2 emissions are exempt from paying road tax, whilst all other vehicles are required to pay the following amount of tax –

VED band CO2 emissions (g/km) First year rate Standard rate
A 0 – 100 £0 £0
B 101 – 110 £0 £20
C 111 – 120 £0 £30
D 121 – 130 £0 £110
E 131 – 140 £130 £130
F 141 – 150 £145 £145
G 151 – 165 £185 £185
H 166 – 175 £300 £210
I 176 – 185 £355 £230
J 186 – 200 £500 £270
K 201 – 225 £650 £295
L 226 – 255 £885 £500
M Over 255 £1,120 £515

 

Car tax bands for cars registered before March 2001

It’s much simpler to calculate car tax for cars registered before March 2001, being split into two categories based on engine size –

Engine size 12 months Six months
Under 1549cc £145 £80
Over 1549cc £235 £129

 

To find the cost of tax on your desired vehicle, visit the Vehicle Certification Agency website.

Paying your car tax

When do you pay car tax?

You can tax a car for a period of 6 or 12 months. If you own a car you will automatically receive a reminder letter before your tax is due to expire, which is always at the end of a given month.

How do you pay car tax?

The easiest way to pay car tax is online on the GOV.UK website. You will need the reference number from your payment reminder letter or from your vehicle log book (V5C). Car tax can be paid by debit card, credit card or direct debit. You can also pay car tax over the phone or in person at a Post Office.

What happens to your car tax when you sell your car?

When you sell your car, you can have any remaining tax refunded to you – simply let the DVLA know and they will process a refund. You are no longer permitted to transfer any remaining tax to the new registered keeper.

How is car tax monitored?

Car tax is monitored by an electronic database maintained by the DVLA. Police and other law enforcement agencies use a network of Automatic Number Plate Recognition (ANPR) cameras to monitor taxed and untaxed vehicles. Before 2014, the tax disc system operated in the UK where motorists were required to display a paper disc in the car windscreen as proof the car was taxed.

What happens if you don’t pay car tax?

If you don’t pay your car tax, you’ll first be issued with a Late Licensing Penalty (LLP) letter which carries an £80 fine (this can be reduced to £40 if you pay within 28 days). If you fail to pay this penalty, you risk much higher fines, being taken to court and having your vehicle repossessed by a debt collection agency.

Car tax exemptions

The following vehicles are exempt from car tax, though you still need to apply for it with the DVLA –

  • Vehicles used by a disabled person
  • Disabled passenger vehicles
  • Mobility scooters, powered wheelchairs and invalid carriages
  • Historic vehicles built more than 40 years before 1 January of the current year
  • Electric and zero emission
  • Mowing machines
  • Steam vehicles
  • Vehicles used just for agriculture, horticulture and forestry

For more information on vehicles exempt from vehicle tax, visit the GOV.UK website.

Can you drive a car with no tax?

It’s illegal to drive a car on a public road without road tax. The only exceptions are if your vehicle is exempt (as listed above), or if you are taking your car to a pre-booked MOT test.

Do I need to tax my car if I don’t drive it?

Yes, the law states that a registered vehicle being kept or used on public roads must be taxed and insured. The exception to this is if your car is being kept off road in a garage, on a driveway or on private land, it can be declared SORN (Statutory Off Road Notification). If you declare your car SORN, it doesn’t need to be taxed.