Car Tax Explained: How VED Works in the UK
Car tax in the UK is officially called Vehicle Excise Duty, or VED. It is a yearly charge for every vehicle that uses public roads, and the amount depends on when the car was first registered, how much CO2 it emits, and how much it cost new. The system has changed several times in the last decade, which is why two cars on the same forecourt can have very different tax bills.
#Who collects car tax
Vehicle Excise Duty is collected by DVLA, the Driver and Vehicle Licensing Agency in Swansea. It is a legal requirement for any vehicle kept or used on public roads, even if you only drive it once a year. Any vehicle kept off road for an extended period must be declared SORN, which we cover further down.
#The two systems you will meet
The big change happened on 1 April 2017. Cars registered before that date pay tax based on a single CO2 band table for life. Cars registered on or after that date pay a high first-year rate based on CO2, then a flat standard rate from year two onwards.
If you are buying a used car, the registration date is the most important number on the V5C. It tells you which system the car sits under for the rest of its life.
#Cars registered after April 2017
For cars registered on or after 1 April 2017, the first-year rate is set on a sliding scale by CO2. Pure petrol and diesel cars with very low CO2 pay a small amount in year one. The dirtiest large diesels pay over £2,500 in year one.
From year two onwards, almost every petrol and diesel car pays the same flat standard rate, currently £200 a year. Hybrids pay slightly less. Electric cars now also pay the standard rate as of April 2025, after years of being exempt.
#The expensive car supplement
Cars registered after April 2017 with a list price of over £40,000 also pay an extra supplement on top of the standard rate for five years from the second year. That comes to £640 a year, so a £45,000 car pays around £840 in total annual VED for years two to six. It then drops back to the standard rate.
#Cars registered before April 2017
For older cars, the system is much simpler. Each car sits in one of 13 lettered CO2 bands, A to M. Band A cars (under 100 g/km) used to be free. Band M cars at the top can pay over £700 a year. The band stays with the car for life unless the engine is changed and re-rated.
#Electric cars and the 2025 change
For years pure electric cars paid no VED at all. From April 2025 onwards, EVs pay the standard rate from year two, and EVs with a list price over £40,000 also pay the expensive car supplement. EVs registered before April 2017 also moved into a small annual band. The shift was part of broader Treasury planning as EVs become a much larger share of the fleet.
#How to tax a car
You can tax a vehicle in three ways. The DVLA online service at gov.uk is the fastest. You can also tax over the phone with DVLA, or in person at any Post Office that handles vehicle tax. You will need either the V5C reference number, the V11 reminder, or the green new keeper slip from the V5C.
You can pay annually, six monthly, or by monthly direct debit. The monthly option costs roughly 5% more across the year because of the admin charge. If you sell the car or take it off the road, the remaining months are refunded automatically to the named keeper.
#SORN: declaring a car off road
If you keep a car off public roads, on a driveway or in a garage, and you do not want to pay tax or insurance on it, you must declare it Statutory Off Road Notification (SORN). This is free, done online, and removes the legal requirement to tax and insure. The car must not touch a public road for any reason while SORN, including for an MOT test, unless you drive it directly to a pre-booked test.
#Penalties for not taxing
DVLA cross-checks tax records against the national ANPR camera network monthly. An untaxed car will trigger an automatic £80 fine, reduced to £40 if paid within 28 days. Continued failure to tax can lead to court proceedings, fines of up to £1,000, and the car being clamped or removed.
#Quick checks before you buy a used car
Before paying for a used car, run the reg through the free DVLA vehicle enquiry service at gov.uk. It tells you the current tax status, the MOT status, the CO2 band and the registration date. Cross-check that against the V5C the seller hands you. For a wider buying checklist, see our first month after passing guide and the V5C logbook explained page. The full guides library covers other money topics for new drivers.
Frequently asked questions
How do I check if a car is taxed?
Go to gov.uk/check-vehicle-tax and enter the registration. The page shows the tax status, MOT status and CO2 emissions. The check is free and updated daily.
Can I tax a car without the V5C?
Yes, but only with a V11 reminder or a green new keeper slip. If you have neither, apply for a replacement V5C first. It costs £25 and takes about a week.
Are very old cars exempt from tax?
Cars over 40 years old qualify for historic vehicle status. They pay no VED but you must still tax them every year on the historic class.
Do I pay extra tax on diesel cars?
Diesels registered after April 2018 that do not meet the RDE2 emissions standard pay one band higher in the first year. Most cars from late 2020 onwards meet RDE2.
Will I get caught if I forget to tax for a few weeks?
Almost certainly. ANPR cameras flag untaxed cars automatically. The £80 fine arrives in the post within a few weeks.
What happens to my tax if I scrap the car?
DVLA refunds whole remaining months automatically once the scrap yard issues a Certificate of Destruction and notifies the agency.
Independent UK driving test analytics, reviewed against the latest DVSA quarterly statistical release.
Continue reading
A clear UK guide to the MOT test. When your car needs one, what is checked, what counts as a fail or advisory, the £54.85 maximum price, and how to keep costs down.
A clear guide to how UK car insurance groups work, what really sits behind the 1 to 50 ABI rating, and how to use it to choose a cheap first car without surprises.