Everything you need to know about Vehicle Excise Duty

Need to know more about the new vehicle excise duty or car tax prices? We cover everything here to make sure you know what has changed
edited picture of a vehicle tax disk resting on computer keyboard with the title everything you need to know about vehicle excise duty

Everything you need to know about Vehicle Excise Duty

Vehicle Excise Duty or VED is commonly referred to as Road Tax. A tax levied by the government to drivers which bring the UK government £730 million every year in revenue. The 2015 budget announcement stated that all funds raised through VED will be used in the upkeep of Britain’s road network by 2020. This Vehicle Excise Duty is collected by The DVLA who govern Britains road users.

Fun Fact: Despite VED being commonly referred to as Road Tax. The tax isn’t on the road. It’s on the vehicles that use it. Road tax was abolished in the 1930s, and the cost of maintaining Britain’s roads is currently covered by general taxation.

What Changed with Vehicle Excise Duty in April 2017?

Vehicle Excise Duty saw a big change in April 2017. The previous system introduced in 2001 was based on vehicle emissions. It was part of a push to reduce the desire for higher polluting cars. Vehicles which emitted more pollutants cost more to tax so drivers were persuaded to purchase cleaner vehicles.

The premise remained the same for cars already on the road when changes happened in April. However, new cars purchased after this date will be subject to different VED costs. There is a first-year rate now sees higher polluting cars face a charge of up to £2,000. Only zero-emission cars are exempt.

What are the First Year charges for different car co2 emissions?

The difference in first-year costs between driving a Nissan Leaf or a Porsche 911 is vast. In the table below you’ll see just how much a higher polluting car is going to cost in the first year payment alone. If you’re buying or leasing a new car then you’ll need to know these first-year rates. The impact they have on overall running costs are substantial and being aware of them in advance will help you to budget better.

close up of a cars exhaust pipe chucking out lots of smoke and co2
CO2 Emissions (g/km)First-year rate
0£0
1-50£10
51-75£25
76-90£100
91-100£120
101-110£140
111-130£160
131-150£200
151-170£500
171-190£800
191-225£1,200
226-255£1,700
Over 255£2,000

 

How much will I have to pay after that?

Once you’ve made your first-year payment all cars go onto the same standard rate. This is regardless of the car’s emissions. The rate is fixed at £140 per year. The only break to this rule is if the car cost more than £40,000 new. In cases where the car was purchased for more than £40,000 an annual premium of £10 is added for the first five years. This makes the VED cost per year £450.

Vehicle Excise Duty for older vehicles

If you drive a car that was registered on or before 1 March 2001 then you will continue to pay VED at the rate you have been accustomed to. This rate is calculated based upon cubic centimetres meaning that engines smaller than 1549cc or approx 1.5 litres must pay £145 per year if they pay for 12 months up-front.

Older cars with larger engines are required to pay £235 per year.

On this scheme of VED you are incentivised to pay up front to get the better deal. If you elect to pay in 6-month instalments then the price may vary slightly.You can see a full breakdown of the charges by going to the DVLA website.

Vehicle Excise Duty for newer vehicles

We’ve already given you the low down on brand new cars. But if your car was purchased new after 1 March 2001 then your VED rate is calculated differently too. For newer cars the emissions are what count and can affect the price you pay. Petrol and diesel cars are the most common vehicles taxed. The VED calculation is broken down into bands. Cars are categorised into a band based upon their CO2 emissions. The prices below are based upon paying for 12 months VED up-front. However, there are other payment options and the price for these will differ.

Modern white mini parked next to original dark mini in country setting
BandCO2 Emissions (g/km)Annual Price
AUp to 100£0
B101-110£20
C111-120£30
D121-130£110
E131-140£130
F141-150£145
G151-165£185
H166-175£210
I176-185£230
J186-200£270
K201-225£295
L226-255£500
MOver 255£515

Vehicle Excise Duty for alternative fuel vehicles

Cars powered by alternative fuel have slightly different charges but they are calculated in the same way. Based on emissions all hybrid vehicles or those who run on biofuel or another variant of gas will be included in this structure of pricing. Like above, the costs will vary slightly depending on how you prefer to pay.

BandCO2 Emissions (g/km)Annual Price
AUp to 100£0
B101-110£10
C111-120£20
D121-130£100
E131-140£120
F141-150£135
G151-165£175
H166-175£200
I176-185£220
J186-200£260
K201-225£285
L226-255£490
MOver 255£505

 

How To Pay Vehicle Excise Duty

Paying your VED can be done in a variety of ways. The quickest and easiest solution is to pay online by debit or credit card. When making an online payment you will need at least one of these documents to hand.

The car’s V5C registration document or the V5C/2 new keeper supplement if you’ve only just bought the car.

The V11 reminder letter or your last chance warning letter.

Alternatively, you can pay over the phone by calling 0300 1234321. This call is charged at local rate. Or you may also pay at the Post Office. When paying for your tax at the Post Office you’ll need one of the documents listed above plus, you may also need your MOT test certificate, valid for the start of the new tax period, and a valid Reduced Pollution Certificate if the vehicle has been modified to cut its emissions.

Note: In Northern Ireland, you’ll need to bring your insurance certificate or cover note.

What vehicles are exempt from paying Vehicle Excise Duty?

Not all vehicles on the road are required to pay vehicle excise duty. Here’s the complete list of all vehicles exempt from paying vehicle tax.

  • Any vehicle used by a disabled person (find out more about Motability)
  • Any Vehicles registered before 1 January 1977
  • Electric vehicles
  • Steam vehicles
  • Mobility scooters
  • Ride-on lawn Mowers
  • Agricultural, horticultural and farming vehicles
  • If your car is very green and emits less than 100 grams of CO2 per kilometre.

What does it mean if a car is SORN?

You can own a car that is not driven on public roads and in this case you are also exempt from paying vehicle excise duty. You must, however, declare it to the DVLA. This declaration is known as a Statutory Off-Road Notification (SORN). If you don’t declare your off-road vehicle as SORN then you will be liable for paying tax.

old yellow beetle sat in home garage

Other things to remember about Vehicle Excise Duty

You no longer receive a tax disc to display in your car windscreen once you’ve paid your VED. This was abolished in 2014. It’s certainly a greener approach and means you don’t have to wait for a tax disc to arrive in the post so I expect it’s also saving a lot of money in postage fees for the government too.

Another important change is that you can no longer buy a car pre-taxed. Some second-hand car dealers would include 6 months tax on the car as a buyer incentive to help close the deal. Or, if you were selling a car mid-way through the tax period it could be passed on to the next owner. This changed in 2014 too, so the new owner needs to tax the car before they can drive it.

Don't want to be paying high tax?  Find out if any of these electric city cars will suit your lifestyle 

Request a call back from one of our Vehicle Experts

Faye Lindeck

Faye Lindeck

Faye enjoys Music, Dog Walking and Socialising with friends.

Faye is an experienced blogger with a keen eye for finding excellent information about the subjects she writes about. Giving OSV blog readers the most accurate knowledge.
Faye Lindeck

Leave comments

Your email address will not be published.*



You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top