Car tax bands: 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 it’s calculated and how to work out your car tax band.

Car tax bands - How much is car tax

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 £5-£6 billion 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. You can calculate car tax by separating it into 4 main types –

  • Cars registered on or after 1 April 2020
  • Cars registered between 1 April 2017 and 1 April 2020
  • Cars registered between 1 March 2001 and 1 April 2017
  • Cars registered before 1 March 2001

Car tax bands for cars registered on or after 1 April 2020

Cars registered on or after 1 April 2020 will pay a rate based on the vehicle’s CO2 emissions. As of 1 April 2020, emission testing switched from NEDC (New European Driving Cycle) to WLTP (Worldwide Harmonised Light Vehicle Test Procedure), which is regarded as a more realistic evaluation of your car’s fuel consumption.

 

CO2 emissions (g/km) First year rate
0 £0
1 – 50 £10
51 – 75 £25
76 – 90 £110
91 – 100 £135
101 – 110 £155
111 – 130 £175
131 – 150 £215
151 – 170 £540
171 – 190 £870
191 – 225 £1,305
226 – 255 £1,850
Over 255 £2,175

 

For more information, view tax rates on the GOV.UK website.

Car tax rates for cars registered between 1 April 2017 and 1 April 2020

Cars registered between 1 April 2017 and 1 April 2020 with 0g/km CO2 emissions are exempt from paying road tax (Vehicle Excise Duty), 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 5 years.

Car tax bands for cars registered between 1 March 2001 and 1 April 2017

Cars registered between 1 March 2001 and 1 April 2007 with 0 -100g/km CO2 emissions are exempt from paying road tax (Vehicle Excise Duty), 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 rates for cars registered before 1 March 2001

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?

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.

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.

 

Paying your car tax

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 of the date on the letter. 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.