Car tax bands: a complete guide to car tax

Vehicle Excise Duty sets the car tax fee for drivers in the UK to legally use a car on public roads. Road tax rates adjust each financial year for inflation based on fuel type, CO2, and registration date. Pay your car tax on time to stay compliant with Government rules.

Budget 2026: car tax band changes

The Autumn Budget introduced important changes to the UK car tax system, with Budget 2026 announced by Rachel Reeves and the Chancellor affecting how much drivers pay through car tax band changes beyond previous road tax rates.

Pay-per-mile road tax for electric car drivers

From April 2028, electric car drivers and plug-in hybrid cars will follow a pay-per-mile eVED system under the Electric Vehicle Excise Duty.

This will replace the existing Vehicle Excise Duty VED rate with new rules introduced by the Government.

The charges are 3p per mile for the average electric car driver driving 8,000 miles a year, and 1.5p per mile for lower mileage, adding an extra £240 per year compared to current road tax.

The system is designed to operate while protecting motorists’ privacy, requiring drivers to report miles driven via installed trackers.

Mileage checks will be performed at the first and second registration anniversary at MOT test centres to assist those responsible for administering the scheme.

From my experience, knowing the eVED system and how it calculates costs helps you manage annual driving efficiently and stay compliant without unexpected charges.

Expensive Car Tax Supplement threshold increases to £50,000 for EVs

The Expensive Car Supplement for luxury car tax will see its threshold increased from £40,000 to £50,000 for EV buyers.

This applies to electric cars first registered from 1 April 2025 onwards and takes effect fully from 1 April 2026.

If an electric car registered exceeds the list price limit, owners are required to pay the supplement, which adds £425 a year to the total annual VED.

This brings the total to £620, ensuring high-value electric cars contribute fairly while encouraging mid-range EVs adoption.

From my experience, tracking the list price and timing purchases around the Expensive Car Supplement helped me avoid unexpected VED costs and make smarter EV decisions.

How much is my car tax in 2026?

The car tax rates for VED 2026 were released in April 2026, showing the cost for newer car drivers and vehicles first registered after 2017.

Standard annual road tax starts around £195–£200, while electric cars benefit from free road tax or a flat rate depending on fuel type and tailpipe emissions, detailed in the electric car road tax guide.

For vehicles with a list price that exceeded £40,000 or £50,000, owners are liable for the luxury car tax, a fee that adds £425 to annual VED costs, bringing the total to £620.

Exact payment amount depends on the bands, first used date, and emissions, providing clarity for EV drivers and car owners navigating annual VED.

From my experience, checking the VED bands and tailpipe emissions early has made planning annual road tax simple, particularly for electric cars, saving both time and unexpected costs.

UK car tax bands explained

Car tax bands are calculated based on several criteria, including the date a vehicle was first registered and the car cost.

The fuel type, whether petrol, diesel, or electric, and the tailpipe CO2 a vehicle produces also determine the tax.

Vehicles registered on or after 1 April 2017 follow a flat fee system, with additional luxury car tax applied if the cost exceeds £40,000 or £50,000, applies for five years with higher rates in the second year of registration.

Older cars, registered between 1 March 2001 and 31 March 2017, are taxed according to CO2 bands, where lower tailpipe emissions attract lower vehicle tax, and payments are usually paid in advance for the first 12 months when buying a new car.

Maintaining car insurance cover and a valid MOT for vehicles over three years old is essential in Northern Ireland and across the UK, as rates are split across CO2 bands to fairly tax a vehicle depending on how the vehicle uses fuel.

From my experience, knowing the CO2 tailpipe emissions and the relevant tax band for a new or used car has helped me plan long-term costs and avoid unexpected payments.

How do I find the tax band for my car?

To find the tax band for your car, start by checking the vehicle registration year and the details on your V5C logbook.

The fuel type and CO2 emissions of your vehicle determine the correct tax band and the corresponding annual VED you are liable to pay.

From my experience, keeping the V5C logbook handy and noting the CO2 emissions when buying a new or used car has made it easy to quickly identify the correct tax band and avoid unexpected costs.

Tax bands for cars registered before 1 March 2001

Cars registered before 1 March 2001 are classed into two categories.

The first category is Private/Light Goods (PLG) vehicles, which includes private motor cars and goods vehicles not more than 3,500kg revenue weight.

The system splits these based on engine size, with cars not over 1549cc and over 1549cc assigned different PLG Tax Classes.

Payment options include 12 monthly Direct Debit instalments or six months upfront, with fees ranging from £121, £198, £220, £360, up to £378, and owners may pay more overall depending on total payable.

These payments cover road tax for the period, ensuring compliance with regulations and clarity for owners of older cars.

From my experience, choosing Direct Debit for older cars helped spread the road tax cost while keeping track of the PLG Tax Class ensured I never underpaid.

Tax bands for cars registered after March 2001 and before April 2017

Cars registered after March 2001 and before April 2017 follow VED road tax rates based on CO2 emissions, with the vehicle split into 13 bands where lower CO2 produces a lower tax band. Under 2025 VED rule changes, cars with CO2 emissions below 100g/km no longer qualify for free road tax and must pay £20 a year if they emit up to 100g/km. Petrol and diesel cars remain broadly the same across VED bands.

The annual rates for each VED band are:

From my experience, checking a vehicle’s CO2 emissions against this table before purchase has helped me plan for annual road tax costs accurately and avoid unexpected charges.

Road tax for cars registered after April 2017

Cars registered after April 2017 are taxed based on CO2 emissions g/km, with a First year rate that varies depending on emissions and a Standard rate of £195 for subsequent years. Vehicles with a list price over £40,000 or £50,000 incur an additional rate of £425 per year for five years, capped by a five-year limit, starting from the second year after first registered, ensuring new cars with high emissions contribute fairly to VED road tax.

The CO2 emissions and first-year rates are as follows:

From my experience, referencing this table when buying a new car or an electric car with a high list price made planning VED road tax much easier and avoided unexpected additional costs.

What is car tax or VED and why do I have to pay it?

Vehicle Excise Duty (VED), commonly known as car tax or road tax, is a tax levied for using a vehicle on public roads in the UK.

The system was introduced in 1937, replacing older methods of taxation such as those for Hackney Carriages dating back to the 17th century.

It follows a lineage from the tax disc introduced in 1921 and used until 1974 for car taxation, after which local authorities and DVLC offices managed vehicle registration and driver registration.

The DVLA (Driver and Vehicle Licensing Agency) now collects around £5 billion, which is spent on road improvements and infrastructure, while VED is grouped alongside other forms of tax funding income, education, healthcare, and roads.

The tax disc was abolished in 2014, modernizing the system and fully establishing the DVLA as the office responsible for vehicle and driver registration, simplifying car tax administration across the UK.

From my experience, knowing how VED works and seeing where the tax is spent has made paying car tax feel like a tangible contribution to safer, better-maintained public roads.

How is car tax monitored?

Car tax is monitored by the DVLA through a combination of historical methods and modern technology.

While motorists are not required to display a tax disc on their windscreen, all VED records are stored in an electronic database that allows the government to digitise administration and support public services.

Police and other law enforcement agencies use Automatic Number Plate Recognition (ANPR) cameras, including roadside cameras and police vehicle systems, which exchange data with the DVLA database.

This system records whether vehicles are taxed or untaxed, effectively replacing the old paper disc system referenced in history books.

From my experience, understanding how the ANPR system links directly to the DVLA database has made it clear that keeping car tax up to date is essential, as roadside checks are now automated and highly accurate.

When do you have to pay your car tax?

Car tax must be paid when your vehicle reaches the end of its taxed period.

Most owners automatically receive a reminder before the tax due date.

The tax due usually expires at the end of the month if not renewed.

Payments can cover 12 months from 1 January or be renewed at the end of December, and if you are buying a new efficient vehicle that costs less, some may pay nothing initially.

How much do I have to pay for my car tax?

The amount you pay for car tax depends on the age of your car.

It also depends on the assigned tax band.

You can consult tables and tax bands explained to find out the amount you need to pay for your car.

Knowing your car’s tax band helps plan road tax expenses efficiently.

How do I pay for my car tax?

You can pay car tax or road tax online using a reference number.

This number may come from a recent reminder, V11, or last chance warning letter issued by the DVLA.

You will need the Vehicle logbook (V5C or V5C/2) in your name or green new keeper supplement if the car was recently bought.

The system is easy to use, with options including:

• Debit card or credit card
  
• Direct debit
  
• Telephone (24-hour service, 0300 123 4321)
  
• Post Office
  

Some additional charges may apply depending on the method.

What happens if I don’t tax my car?

If the registered keeper fails to pay car tax, the untaxed vehicle may trigger a Late Licensing Penalty (LLP).

• £80 fine, reduced to £40 if paid within 33 days
  
• Debt collection agency may become involved if unpaid
  

Alternatively, you can file a SORN (Statutory Off Road Notification) or use an Out of Court Settlement (OCS) for £30.

Driving an untaxed vehicle on a public road may result in:

• Penalties up to £1,000
  
• Clamping with £100 release fee for first 24 hours
  
• Removal with £200 + £21/day storage fee at a vehicle pound
  

Police and ANPR cameras routinely check vehicles. Abandoned cars may be stored 7-14 days, then auctioned, broken for spares, or crushed.

Making a SORN allows you to take a vehicle off the road, stop taxing, and continue insuring.

Car tax exemptions

Certain vehicles are exempt from vehicle tax.

This can apply to:

• Disabled person or disabled passenger vehicles
  
• Mobility scooters and powered wheelchairs
  
• Invalid carriages
  
• Historic vehicles built more than 40 years as of 1 January of the current year
  
• Mowing machines, steam vehicles, and agriculture, horticulture, forestry vehicles
  

For cars registered on or after 1 March 2001, the system is complex, but eligible owners can pay via direct debit.

What happens to your road tax when you sell your car?

When you sell a car, road tax changes within the system.

If buying or selling a new car after October 2014, the unexpired tax can be transferred to the new registered keeper.

The new owner must tax the car before driving away.

Any remaining tax is refunded to the seller by the DVLA.

Conclusion

Understanding car tax, VED, and the associated tax bands ensures every vehicle owner stays compliant while avoiding fines or penalties. Keeping track of renewals, exemptions, and payment options helps manage costs efficiently and protects your ownership rights. Stay informed and plan ahead to make car tax simple, predictable, and stress-free.

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