Vehicle Tax Rates: What You Ought to Know

Using a vehicle attracts various expenses, and car tax is one of the costs you must budget yearly. Vehicle Excise Duty (VED), commonly known as road tax or vehicle tax, is a high running cost that can run over £1,000 annually depending on how environmentally friendly the vehicle is.
Vehicle Tax Rates: What You Ought to Know
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Aside from carbon dioxide emissions, the car tax you pay also depends on other factors, including the vehicle engine size and the year of registration. Car tax is payable on all vehicles registered or driven on a public road. Choosing the right vehicle can make a difference in your vehicle tax expenses. Plus, a low-tax vehicle means it holds its value better, and you will have lower running costs in future. If a car is kept off the road, you must pay tax or get a Statutory Off Road Notification (SORN). Read on to discover car tax rates for your vehicle and the VED changes introduced in April 2022.

What Are UK Vehicle Tax Rates?

Vehicle Excise Duty is a tax you pay for using your car on public roads. The tax came into effect in 1937, replacing the old road tax system, which traced its roots back to the taxation of Hackney Carriage in the 17th century. While local authorities handled the initial tax, in 1974, the Driver and Licencing Vehicle Centre (DVLC) was introduced. DVLC later became the Driver and Vehicle Licencing Agency and is in charge of collecting vehicle excise duty.

The UK Car Tax Bands Explained

Vehicle tax rates in the UK are based on the fuel type, engine size and carbon dioxide emissions depending on when the car was first registered. The rates for vehicles registered on or after 1st March 2001 or 1st April 2017 are divided into bands, with vehicles with lower emissions attracting a lower tax and vice versa.

For a vehicle to be taxed, it should also have an insurance cover and a valid MOT. Both are checked online when you are applying for car tax.

Vehicle Tax Rates for Cars Registered Before 1st March 2001

Cars registered before 1st March 2001 are classified as private motor cars, private/light goods (PLG) vehicles and goods vehicles not more than 3,500 kg weight. The system for taxing cars in the category is straightforward since vehicles are split into two categories of below 1549cc and above 1549cc engine size.

PLG vehicles below 1549cc attract a single 12-month payment of £180 or a six-month payment of £99. PLG cars with engine sizes of over 1549cc attract a 12-month charge of £295, while the six-month payment is £162.25.

Tax Bands for Vehicles Registered After March 2001 and Before April 2017

Since March 2001, car tax rates have been split into 13 bands based on a vehicle’s carbon dioxide emissions. Cars with lower CO₂ have a lower tax band; if your vehicle has CO₂ emissions below 100g/km, you will not pay a road tax.

Car buyers of vehicles registered between April 2010 and April 2017 also incur a showroom tax or first-year rate to incentivise the purchase of efficient vehicles. That’s why there is no first-year tax on vehicles with less than 130g/km carbon emissions. The VED for alternative fuel cars like hybrids and plug-in hybrids is less than £10 for regular diesel and petrol cars.

Vehicle Tax Rates for Cars Registered After April 2017

The vehicle taxing system for new cars in the UK changed. While VED is still calculated based on CO₂ emissions, only cars with zero emissions are exempted from tax. The standard tax rates for CO₂ emissions are also higher. Nowadays, VED is handled by an electronic database, and instead of the traffic police checking the tax disc, they can assess the vehicle tax payments using Automatic Number Plate Recognition (ANPR). The VED tax rates introduced in April 2022 saw an increase in prices across the board in line with inflation.