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TAX MY CAR

How to tax your car

Mehdi Punjwani
Written by  Mehdi Punjwani
5 min read
Updated: 08 Dec 2023

Taxing your car is a relatively straightforward process, but there are some things you’ll need to bear in mind. In our complete guide to taxing your car, you’ll discover how much it will cost, and whether you might be exempt based on the type of vehicle you have.

The cost of car tax, or road tax, or Vehicle Excise Duty (VED)

Whether you call it car tax, road tax, or its proper name, Vehicle Excise Duty, your car has to have tax – as well as an MOT and car insurance – to be on the road.

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How can I tax my car?

When your car tax is up for renewal, you should receive a V11 reminder letter, but you can use the reference number in your V5C log book if you haven’t received this or have lost it. If your vehicle is a new purchase, you should have been given a V5C/2 supplement with a reference number from the past owner that you can use if you are without a log book.

You can pay your tax online on the government website and fill in the reference number. From this, you can view the tax status of your car, and you can choose how you wish to pay.

How do I tax a new car?

If you buy a car brand new from a dealership, it should normally come taxed already, with the cost included in the overall price alongside the registration fee. They should also take care of giving yours and the car’s details to the DVLA. However, be sure to ask about this before making your purchase so you know for sure.

How do I tax a second-hand car?

If you’re buying a second-hand car, it’s likely to depend on where you’re buying it from. As mentioned above, dealerships should sell cars with tax already included in the price.

But if you’re buying your car from a private seller, they’ll need to fill out the new keeper section of the V5C document and send it to the DVLA. As the new owner, you’ll keep the green part of the V5C form - known as the V5C/2 - and use it to tax your new car on GOV.UK. This will need to be done before you can drive the car, and within four weeks you should receive the full V5C back from the DVLA.

If the previous owner doesn’t give you the V5C form, you will then need to apply for a new registration certificate with a V62 form. However, if this is the case you should be cautious as this could be a sign that the vehicle is not theirs to sell - it may be stolen or otherwise illegally obtained.

You can check if a car is already taxed on GOV.UK

How do I renew my car tax?

If you need to renew the tax on your current car, you can do this on gov.uk, over the phone with the DVLA, or at the post office. Remember to bring your V11 reminder or your V5C form, and if you’re using the post office you should bring a valid MOT certificate too.

Can I pay my car tax at my Post Office?

Yes, you can pay for car tax at main Post Offices. You can either take the DVLA reminder form with you, otherwise known as a V11, or you can take your log book.

To tax your car, you will need an up-to-date MOT certificate, which is valid from your tax start date. In Northern Ireland, you’ll also need to provide an insurance certificate or cover note.

If you want to check if the Post Office can process your car tax, you can find your local branch online and contact them.

Can I pay my car tax by phone?

Yes, you can. The DVLA advises that you call with your log book (the V5C) to hand – the number is 0300 123 4321. If you’re the new owner of the car, then you will need the ‘new keeper’ V5C/2 form.

How much is my car tax?

How much you pay in car tax depends on the make and model of your car, how environmentally friendly the government thinks it is, and how old your car is. Find out exactly how much tax you need to pay.

To understand the recent changes to car tax rules, it helps to split things into four bands:

Car registered before 1 March 2001: You pay £180 for a single annual payment if your engine size is up to 1549cc; it’s a higher £295 rate if the engine size is above 1549cc

Cars registered between 1 March 2001 and 31 March 2017: Your tax rate is based on CO2 emissions and fuel type; you’ll often pay less than if your car is registered on or after 1st April 2017.

Cars registered on or after 1 April 2017: How much you pay in the first year depends on the CO2 emissions and fuel type. After the first year:

  • Petrol and diesel cars will pay a flat ‘standard’ rate of £180.

  • Alternative-fuel vehicles will pay £170.

  • Cars that cost more than £40,000 pay an extra £390 for the next five years unless it’s a zero-emission vehicle.

Cars registered after 1 April 2023

With price increases, a new car’s tax could be anywhere from £0 to £2,605 in the first year depending on the vehicle’s carbon dioxide emissions. After the first year, all cars have a flat annual rate, being £180 for petrol and diesel as well as £170 for alternatively fuelled cars.

Newer diesel cars registered from April 2018 may not meet the new Real Driving Emissions 2 (RDE2) standards for nitrogen oxide (NOx). These vehicles may attract a higher tax band, especially for bigger-engine diesel cars which is all part of the plan to encourage us out of diesel-powered vehicles.

If your vehicle was built before 1 January 1978, then your vehicle is exempt from all vehicle tax.

When is my car tax due?

Enter the registration plate of your car and you can find out when your car tax is due. It doesn’t have to be the car you personally own.

If you forget to pay your car tax, you may be liable for a fine of up to £2,500 – so mark the date in your diary to get it renewed every year.

Which cars are exempt from paying road tax?

Some types of vehicle are exempt from vehicle tax, meaning it’s free to tax them. 

You do not have to pay if you have one of the following types of vehicle:

  • Vehicles used by a disabled person

  • Disabled passenger vehicles

  • Historic vehicles (Vehicles made before 1 January 1981)

  • Electric vehicles

  • Mowing machines

  • Steam vehicles

  • Vehicles used for agriculture, horticulture, and forestry

Are electric cars exempt from road tax?

Currently you won’t have to pay tax on electric vehicles, as Vehicle Excise Duty is based on vehicle CO2 emissions. According to government guidelines on their website, you’ll be exempt from car tax if you have an electric car and:

  • It’s powered by an external source like a public or private charge point

  • It’s powered by an electric storage battery that isn’t drawing power from any other source while the vehicle is moving

  • It’s powered by a hydrogen fuel cell

However, from April 2025 the rules will change, and electric vehicle owners will be required to pay Vehicle Excise duty on their cars. The same will be true for cars with low CO2 emissions that are currently exempt, and hybrid and alternative fuel vehicles will no longer be eligible for a reduced tax rate.

This means electric cars, vans and motorcycles will be liable to pay the same car tax rates as petrol and diesel motor vehicles. Electric vehicles and all other vehicles will still require at least third-party insurance to drive on UK roads.

Vehicles with a list price of more than £40,000

You have to pay an extra £335 a year if you have a car or motorhome with a ‘list price’ (the published price before any discounts) of more than £40,000. You do not have to pay this if you have a zero-emission vehicle.

You only have to pay this rate for five years (from the second time the vehicle is taxed). Including the additional price, the rates for an annual non direct debit are £520 for petrol/diesel vehicles or £510 for alternative fuelled cars.

How do I cancel my car tax for a refund?

There are just six scenarios for a refund:

  1. Your car is sold or transferred to a new buyer

  2. Your vehicle is taken off the road – or is served a Statutory off Road Notification (SORN)

  3. Your insurance company has written it off

  4. It’s been scrapped or stolen. If your car is going to be scrapped, there is a specific procedure to follow. If you keep to the guidelines, then a refund will be organised automatically

  5. The vehicle has been exported. If your car leaves the UK for more than 12 months, then the DVLA deems it as a permanent ‘leaver’

  6. It’s legally registered as tax exempt

To cancel your car tax, you will need to contact the DVLA to start the refund process. If you pay your car tax by direct debit, it will be cancelled by the DVLA, and you should be entitled to a refund for all the months left on your tax.

However, any partial months won’t be refunded. So if you cancel on the first day of the month, you will pay for that entire month.

The refund cheque is sent to the name and address on the log book only. You won’t be refunded the 10% surcharge for a single six-month payment, unfortunately, or the 5% surcharge on direct debit payments.

The amount repaid to you will be based on the first tax payment you made when you registered the car or the rate for the second tax payment onwards, whichever is lower.

Can I pay my car tax monthly?

If you pay by Direct Debit you can choose to set it up annually, monthly, or every six months - the amount you pay won’t change.

Does car tax renew automatically?

If you set up a Direct Debit then your car tax will renew automatically - you won’t get a V11 reminder letter, but you’ll be notified by email or post when payment is taken. However, if you don’t have a V5C then your Direct Debit won’t renew and you’ll need to contact the DVLA to inform them who the vehicle owner is.

If your MOT certificate will expire when your car tax is due, the DVLA will inform you - and you’ll need to pass an MOT. Once this is done, your record with the DVLA should automatically update, as should your car tax. But if you don’t get your MOT done on time, you’ll need to re-tax your car.

What happens if I drive without tax?

Some circumstances may mean that you are exempt from paying tax, as listed above. However, if this doesn’t apply to your circumstance and you are caught driving without paying, you will face a penalty.

Typically, you will receive a warning letter, in which you are instructed to pay £80. This can be halved if you pay within 28 days. Ignoring this notice could result in a fine of up to £1,000, or alternatively, you could face a fee of up five times the annual road tax amount if your case is severe enough to go to court.