The rate of vehicle tax paid on cars and other vehicles is determined by their engine size or fuel type and carbon dioxide (CO2) emissions, as well as when the car was first registered. All cars registered after March 1, 2001, for example, fall into one of 13 car tax bands, ranging from A to M. The bands are based on how many grams of carbon dioxide (CO2) a car emits per kilometre driven, with the annual tax set at up to £490. [caption id="attachment_146" align="aligncenter" width="400"] Picture courtesy of http://www.flickr.com/photos/exfordy/[/caption] For cars registered before March 1, 2001, meanwhile, there are just two tax bands: the first is for cars and light goods vehicles with an engine size of 1549cc or less and the second is for vehicles with engines above 1549cc. Those in the first tax band pay £144 a year, while those in the second band pay £225. There are also different rates for cars that are powered by a fuel other than petrol or diesel, as well as for motorbikes and brand new cars. The top annual rate payable on an alternative fuel car, for example, is slightly lower at £480, but a new car registering for its first tax disc can cost up to £1,065 to tax for a year if it has CO2 emissions of more than 225 grams per kilometre. So that’s an extra cost to bear in mind if you are planning to buy a powerful sports car from a showroom. For motorbikes, the rates range from £17 a year for those with engines of 150cc or less and £78 for those powered by engines of 600cc or more.