UK Car Tax Guide: Everything You Need to Know About VED

Vehicle Excise Duty (VED), commonly known as car tax or road tax, is a legal requirement for all vehicles driven or parked on public roads in the UK. Understanding how it works can save you money and help you avoid penalties.

What is Vehicle Excise Duty (VED)?

The Basics

Official Name: Vehicle Excise Duty (VED) Common Names: Road tax, car tax, vehicle tax

Purpose:

• Legal requirement to use public roads
• Funds general taxation (not specifically roads)
• Environmental incentive (lower emissions = lower tax)
• Annual or monthly payment

Important: You need tax even if the car is parked on the road. No tax needed only if car is off-road with SORN declaration.

VED Rates: How Much You'll Pay

New Cars (First Registration)

First Year Rate (2025):

Based on CO2 emissions at registration:

CO2 Emissions	First Year VED
0 g/km (Electric)	£0
1-50 g/km	£10
51-75 g/km	£30
76-90 g/km	£130
91-100 g/km	£165
101-110 g/km	£190
111-130 g/km	£220
131-150 g/km	£270
151-170 g/km	£680
171-190 g/km	£1,095
191-225 g/km	£1,650
226-255 g/km	£2,340
Over 255 g/km	£2,745

Standard Rate (Year 2 Onwards):

After first year, most cars pay flat rate:

• Petrol/Diesel: £190/year
• Alternative fuel (hybrid): £180/year
• Electric: £0/year (until April 2025)

Used Cars (Registered After April 2017)

Standard Rates:

• Petrol/Diesel: £190/year
• Hybrid: £180/year
• Electric: £0/year (changing April 2025)

Used Cars (Registered Before April 2017)

Based on CO2 emissions bands:

Example Bands:

• Band A (0-100 g/km): £0
• Band B (101-110 g/km): £20
• Band C (111-120 g/km): £35
• Band D (121-130 g/km): £150
• Band F (161-175 g/km): £210
• Band J (226-255 g/km): £385
• Band M (Over 255 g/km): £735

Full table available at gov.uk/vehicle-tax-rate-tables

Expensive Car Supplement

Additional £410/year charge applies if:

• Car cost over £40,000 new
• Applies years 2-6 only
• Any fuel type (except electric until 2025)
• Based on original list price, not what you paid

Example:

• £45,000 BMW 3 Series (petrol)
• Year 1: £220 (first registration rate)
• Years 2-6: £190 + £410 = £600/year
• Year 7 onwards: £190/year

Expensive car supplement means:

• £45,000 car: £600/year for 5 years
• Total extra: £2,050 over standard rate

VED Changes Coming in April 2025

Electric Vehicle Tax Changes

From April 2025:

• Electric cars will pay VED
• First year: £0
• Years 2+: £190/year (standard rate)
• Expensive car supplement applies (£40k+)

Why the change?

• Government revenue needs
• EV adoption mainstream
• Fairness argument vs petrol/diesel
• Road usage contribution

What This Means

If you buy electric before April 2025:

• £0 VED for ownership period
• Avoid new charges

If you buy electric after April 2025:

• £190/year from year 2
• £410 supplement if over £40k
• Same as petrol/diesel

How to Tax Your Car

Option 1: Online (Fastest)

gov.uk/vehicle-tax

You'll need:

• Vehicle registration number
• V5C reference number (11-digit)
• Payment method (card/Direct Debit)

Takes 5 minutes:

1. Enter registration
2. Confirm vehicle details
3. Choose payment frequency
4. Enter payment details
5. Immediate confirmation

Benefits:

• Instant tax
• No waiting for disc
• Direct Debit option
• Can tax anytime

Option 2: Phone

Call: 0300 123 4321 Hours: 7am-7pm daily

You'll need:

• Registration number
• V5C reference number
• Payment card

Process:

• Automated service
• Takes 10 minutes
• Confirmation by text/email

Option 3: Post Office

Visit any Post Office

You'll need:

• V5C logbook (or V5C/2 new keeper slip)
• MOT certificate (if applicable)
• Payment method

Process:

• Show documents
• Pay at counter
• Receive confirmation
• Takes 15 minutes

Note: Not all Post Offices offer this service. Check gov.uk/post-office-vehicle-tax

Payment Frequencies

Annual Payment (Cheapest)

Pay once per year

• Lowest total cost
• No additional charges
• Single payment
• Best value

Example:

• £190 standard rate
• Pay £190 once
• Total: £190

Six-Monthly Payment

Pay twice per year

• 5% surcharge
• Two manageable payments
• More flexibility

Example:

• £190 standard rate
• Pay £99.75 × 2
• Total: £199.50 (£9.50 more)

Monthly Payment (Most Expensive)

Pay by Direct Debit monthly

• 10% surcharge over annual
• Smallest individual payments
• Budget-friendly monthly

Example:

• £190 standard rate
• Pay £17.42 × 12
• Total: £209 (£19 more)

Which Payment Frequency?

Choose Annual if:

• Can afford lump sum
• Want lowest cost
• Good at remembering renewals

Choose Monthly if:

• Tight monthly budget
• Want automatic payments
• Don't mind paying extra

Monthly Direct Debit benefits:

• Never forget renewal
• Automatic collection
• Can cancel anytime
• Spreads cost

Tax Exemptions

Who Doesn't Pay VED?

Zero-emission vehicles:

• Electric cars (until April 2025)
• Hydrogen fuel cell

Historic vehicles:

• Registered 40+ years ago
• Automatic exemption
• Must still tax (£0 rate)
• Need MOT if registered pre-1960

Disabled drivers:

• Receive higher rate mobility component
• Registered in disabled person's name
• Apply at gov.uk/financial-help-disabled

Others:

• Agricultural vehicles
• Mobility scooters
• Some heritage vehicles

Electric Vehicles Until April 2025

Currently:

• £0 VED
• Must still "tax" vehicle
• Shows as taxed at £0 rate
• Need to renew annually

Don't skip taxing:

• Even at £0 rate
• Legal requirement
• ANPR cameras check
• Penalties apply

SORN: Statutory Off Road Notification

What is SORN?

Declare vehicle off-road

Use SORN if:

• Not driving car
• Storing in garage/driveway
• Repairing vehicle
• Not using temporarily

Benefits:

• No VED needed
• No insurance needed (though risky)
• Avoids penalties

Requirements:

• Must be off public road
• Includes on-street parking
• Private property only
• Driveway acceptable

How to SORN

Online: gov.uk/make-sorn

You'll need:

• Vehicle registration
• V5C reference number

Takes 2 minutes:

• Free to declare
• Immediate effect
• Can tax again anytime

Important:

• SORN lasts until you tax vehicle
• Don't need to renew annually
• Automatically ends when you tax

SORN Rules

Where you can keep SORN vehicle:

• Private driveway
• Private garage
• Private land
• Secure storage

Where you CANNOT:

• Public road
• On-street parking
• Shared parking areas
• Even outside your house

If caught on road:

• £80 fixed penalty
• Or up to £1,000 fine
• No insurance = up to £1,000 extra
• Vehicle can be seized

Buying a Car: Tax Transfer

Important Change: Tax Doesn't Transfer

Key rule since 2014:

• VED doesn't transfer to new keeper
• Seller gets automatic refund
• Buyer must tax immediately

When You Buy

Before you drive away:

1. Insurance arranged
2. Tax purchased
3. MOT valid (if needed)

How to tax immediately:

Option 1: Online

• Use V5C/2 reference number (new keeper slip)
• Tax online at gov.uk/vehicle-tax
• Pay and drive away

Option 2: Phone

• Call with V5C/2 details
• Immediate tax confirmation

Option 3: Post Office

• Take V5C/2 slip
• Show insurance
• Tax at counter

Seller's Refund

Automatic refund:

• DVLA automatically refunds seller
• Full month refunds only
• Paid by cheque
• Takes 4-6 weeks

Example:

• 8 months remaining = £127 refund
• Seller gets £127 back automatically

Buying From Dealer

Dealer may offer:

• Tax included in price
• Tax for first month
• Arrange tax on your behalf

Always confirm:

• Who's paying tax
• Tax start date
• Cover period
• Get receipt

Penalties and Fines

Driving Without Tax

Automatic detection:

• ANPR cameras
• DVLA database checks
• Continuous monitoring

Penalties:

First offence:

• £80 fixed penalty notice
• Discount to £40 if paid within 14 days

Court prosecution:

• Up to £1,000 fine
• Criminal record
• Vehicle can be clamped
• Can be impounded

Vehicle seizure:

• Collection fee: £160
• Daily storage: £21/day
• Must pay all outstanding tax
• Plus fines
• Plus storage fees

Example total:

• £1,000 fine
• £160 collection
• £210 storage (10 days)
• £190 VED owed
• Total: £1,560

DVLA Enforcement

How they catch you:

1. ANPR cameras - Automatic number plate recognition
2. DVLA database - Continuous checking
3. Police patrols - Manual checks
4. Tip-offs - Public reports
5. MOT stations - Flag untaxed vehicles

Very hard to avoid - sophisticated detection system.

Checking Vehicle Tax

Check Any UK Vehicle

Free online check:

• gov.uk/check-vehicle-tax
• Enter registration
• Instant results

Shows:

• Tax status (taxed/untaxed/SORN)
• Tax due date
• MOT status
• MOT due date
• Vehicle details

Why Check?

Before buying:

• Verify seller's claims
• Check tax status
• See tax due date
• Confirm details match

Your own vehicle:

• Verify renewal processed
• Check status
• Confirm expiry date
• Peace of mind

SORN Check

If showing SORN:

• Vehicle should be off-road
• No valid tax
• Check why SORN
• Ask seller about history

Red flag:

• SORN but seller driving it
• Recently declared SORN (hiding issues?)
• Multiple SORN periods

Tax Refunds

Getting Money Back

You can get refund if:

• Selling vehicle
• Scrapping vehicle
• Taking off-road (SORN)
• Vehicle stolen

Refund calculation:

• Full months only
• Rounded down
• No partial months

Example:

• 7 months 2 weeks remaining
• Refund for 7 months only
• Remaining 2 weeks lost

How to Get Refund

Automatic when:

• You notify DVLA of sale
• Update keeper details
• Scrap vehicle officially

Manual request:

• Apply online: gov.uk/vehicle-tax-refund
• Complete V14 form
• Send V5C with form

Payment:

• Cheque by post
• 4-6 weeks typical
• Registered keeper address

Special Circumstances

Company Cars

Employer tax options:

• Employer taxes vehicle
• Vehicle registered to company
• Employee not responsible

Tax benefit in kind:

• Separate from VED
• Based on list price and emissions
• Paid through payroll
• Different calculation

Lease Cars

Who pays tax:

• Usually leasing company
• Included in monthly payment
• Check lease agreement
• Confirm responsibility

Always verify:

• Tax included in lease?
• Who renews it?
• What if it expires?
• Get written confirmation

Imported Vehicles

First UK registration:

• Must register with DVLA
• Receive V5C
• Pay appropriate first year rate
• Ongoing standard rate

IVA test may be needed:

• Individual Vehicle Approval
• Proves meets UK standards
• Required before registration
• Adds cost and time

VED Cost Calculator

Estimate Your VED

For new cars:

1. Find CO2 emissions (g/km)
2. Check first year rate table
3. Note list price (over £40k?)
4. Calculate years 2-6 with supplement
5. Calculate years 7+ standard rate

Example calculation:

£35,000 petrol car, 120g/km CO2:

• Year 1: £220 (first registration rate)
• Years 2+: £190/year (standard rate)
• No expensive car supplement

10-year ownership cost:

• Year 1: £220
• Years 2-10: £190 × 9 = £1,710
• Total: £1,930

£45,000 petrol car, 120g/km CO2:

• Year 1: £220
• Years 2-6: £600/year (£190 + £410) = £3,000
• Years 7-10: £190 × 4 = £760
• Total: £3,980

Extra cost of £40k+ car: £2,050 over 10 years

Money-Saving Tips

Reduce Your VED Costs

1. Buy lower emission car

• First year rate significantly lower
• Ongoing savings
• Environmental benefit

2. Avoid £40k+ threshold

• £39,995 car = £190/year
• £40,005 car = £600/year (years 2-6)
• Negotiate below threshold

3. Pay annually

• Avoid 5-10% surcharge
• Single payment
• Best value

4. Buy before April 2025 if electric

• Lock in £0 rate
• Avoid upcoming charges
• Grandfathered until you sell

5. Consider pre-2017 car

• May have lower VED
• Depends on emissions
• Check specific rate

6. Check historic exemption

• 40+ year old cars exempt
• Rolling exemption
• Classic car bonus

Common Questions

Can I drive immediately after taxing online?

Yes - tax is effective immediately when you pay online. ANPR cameras update within minutes.

What if my V5C hasn't arrived?

Use V5C/2 reference number - You can tax with the green new keeper slip reference before receiving full V5C.

Do I need a tax disc?

No - Paper tax discs abolished in 2014. Everything electronic now. Don't need anything displayed.

Can I tax at any time?

Yes - Can renew up to 2 months before expiry. Early renewal starts from expiry date, not payment date.

What if I forget to renew?

Grace period: None. Untaxed as soon as expiry passes. Immediate penalties apply. ANPR cameras detect instantly.

Can I cancel my tax?

Yes - If you SORN the vehicle, sell it, or scrap it. Automatic refund processed. Cannot cancel just because you don't want it anymore.

Summary

Key Takeaways:

VED is mandatory:

• Legal requirement for road use
• Even if parked on street
• No exceptions without SORN

Rates vary:

• Based on CO2 emissions
• First year vs standard rate
• Expensive car supplement (£40k+)
• Electric charges from April 2025

Tax doesn't transfer:

• Buyer must tax immediately
• Seller gets automatic refund
• Plan ahead when purchasing

Payment options:

• Annual cheapest
• Monthly costs 10% more
• Direct Debit available
• Online fastest

Penalties severe:

• £80-£1,000 fines
• Vehicle can be seized
• Criminal record possible
• Easy to detect

Check regularly:

• Use gov.uk/check-vehicle-tax
• Verify before buying
• Monitor expiry dates
• Set reminders

Understanding VED ensures you stay legal, avoid penalties, and potentially save money through informed decisions about which vehicles to buy and how to pay your tax. Always tax your vehicle before using public roads - the penalties far outweigh the cost of compliance.