Road tax: all you need to know

We explain the intricacies of road tax, or Vehicle Excise Duty as it’s also known.

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What is road tax (VED)?

Road tax is the commonly-used name for vehicle excise duty (VED), which is an annual tax that must be paid on all vehicles that are used on public roads. The cost of this tax firstly depends upon when your car was registered and then on either the size of the engine or its CO2 emissions.

How much does road tax (VED) cost?

Car registered before 1 March, 2001 fall into two tax bands - engine sizes above and below 1549cc. Cars registered after 1 March, 2001 and by 31 March, 2017 are split across 13 tax bands (A-M) based upon CO2 emissions in g/km.

 

CO2 Emissions in g/km (tax band)

Annual rate for petrol and diesel cars

Annual rate for alternative fuel cars

Up to 100 (A)

£0

£0

101 - 110 (B)

£20

£10

111 - 120 (C)

£30

£20

121 - 130 (D)

£120

£110

131 - 140 (E)

£140

£130

141 - 150 (F)

£155

£145

151 - 165 (G)

£195

£185

166 - 175 (H)

£230

£220

176 - 185 (I)

£250

£240

186 - 200 (J)

£290

£280

201 - 225 (K)

£315

£305

226 - 255 (L)

£540

£530

Over 255 (M)

£555

£545

What about cars registered on or after 1 April, 2017?

The rates are different for cars registered on or after 1 April, 2017. In the first year of registration, the rate is set according to the car’s emissions.

If you have a diesel car that doesn’t meet the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions, the rate you pay for that first year will be higher than for other vehicles.

In subsequent years, most cars will pay a flat ‘standard’ rate of £140. Alternative fuel cars will pay £130 a year and zero emissions cars will pay nothing.

Those vehicles costing more than £40,000 will be required to pay an annual supplement of £310 per year for five years.

Emissions in (g/km CO2)

First year rate for diesel cars that meet RDE2 standard and petrol cars

First year rate for all other diesel cars

First year rate for alternative fuel cars

0

£0

£0

£0

1-50

£10

£25

£0

51-75

£25

£105

£15

76-90

£105

£125

£95

91-100

£125

£145

£115

101-110

£145

£165

£135

111-130

£165

£205

£155

131-150

£205

£515

£195

151-170

£515

£830

£505

171-190

£830

£1,240

£820

191-225

£1,240

£1,760

£1,230

226-255

£1,760

£2,070

£1,750

Over 255 

£2,070

£2,070

£2,060

 

The g/km measure quantifies the grams (g) of CO2 released for every kilometre (km) the car is driven.

The less CO2 released over the same distance, the less fuel is being used.

You can buy road tax for the full year or for six months, though there is a 5% surcharge for a six-month tax disc.

Motorists can also spread the cost of an electronic tax disc by paying in monthly instalments, though again the government levies the 5% surcharge.

Why are there no more paper tax discs?

DVLA stores all vehicle ownership records electronically and both it and the police now use the electronic vehicle register to check if a vehicle should be on the road.

As a result, drivers no longer need to display a paper tax disc in their windscreen.

If you’re buying a vehicle

If you’re buying a car, you can't carry over any remaining months on the tax disc – and the seller can't give or transfer that ‘unused’ tax to you, whether they want to or not.

In other words, if you buy a car in March that is taxed until August, you cannot continue to use the existing tax payment that is associated with the car.

Instead, you have to tax it yourself. And here’s the kicker: you’ll have to make the purchase before you can drive the vehicle. There is no grace period.

If the vehicle is already registered in your name, you can use the 11-digit reference number on the log book (or V5C to give it its true title).

If you have only just bought the vehicle and it is not yet registered, you will need the 12-digit reference number on the New Keeper Supplement (V5C/2).

You can buy a tax disc online at GOV.UK or use the automated telephone service 0300 123 4321.

Alternatively, you can visit your nearest Post Office. You will also need a valid MOT and motor insurance. If you buy online the system will check to see if you’ve got everything in place.

A motor trader is still able to tax the vehicle on your behalf.

If you’re selling a vehicle

If you're selling your car, you need to notify the DVLA by returning the relevant portion of the V5C, or risk a fine of £1,000.  

If there are any full months outstanding on the road tax, a refund will be processed automatically. So if your tax disc ran until 1 September 2018, for example, and you sold the car in the middle of May 2018, you will be entitled to a three-month refund (for June, July and August).

(This means you won’t get a full refund – something that has irritated many drivers, especially as the new owner has to tax the vehicle from the beginning of the purchase month, creating a payment overlap.)

Also bear in mind that surcharges are not refundable. So, if you have paid in instalments or have a six-month tax disc, you could lose out.

If you dodge the tax you have to pay, the penalties can be harsh – including a fine of up to £1,000. Keep in mind that ignorance of the rules is no defence.

If you’re transferring ownership of a vehicle

If you transfer ownership of your car to someone else without actually selling it – if you’ve given the car to your partner or a friend, for instance – you still can’t pass the tax on and will have to still register the transfer of the vehicle with DVLA using the V5C in the same way as if you had sold it.

You’ll automatically get a refund for any remaining full months left on the vehicle tax when ownership was transferred and DVLA will also cancel your direct debit if you were paying monthly.

If you’ve taken ownership of a vehicle transferred to you by someone else, you’ll need to tax the vehicle or make a statutory off-road notification (SORN) from the date it was transferred to you.

If the vehicle is off the road (SORN)

In the same way you can’t transfer road tax when you buy, sell or transfer a vehicle, you can’t transfer a SORN either.

So if you buy a car that has been declared as being kept off the road, this SORN can’t be included as part of the sale or passed on to you so you’ll have to tell DVLA the car is off the road by making a SORN. You can do this at GOV.UK or by phone on 0300 123 4321.

Again, if you dodge tax, the penalties can be harsh – if your vehicle isn’t taxed or it has no SORN it may be clamped and could be hit with a fine of up to £1,000.

 

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