The Car tax, known as Vehicle Excise Duty or VED, can make up a sizeable portion of your car’s running costs. Age, purchase price, fuel type and CO2 emissions can all affect how much car tax you owe.
So, how does VED work? And how much is it, exactly, to tax my car?
Taxing your car: The basics of VED
As a rule, you have to pay car tax (VED) if:
- Your car is registered in the UK
- You drive it on public roads
The Driver and Vehicle Licensing Agency (DVLA) issues the official car tax rates. These are based on your car’s:
- Year of registration
- Engine size or official CO2 emissions (you’ll find this on your V5c registration document)
- As from April 2017, your car’s list price
That said, some cars are exempt from VED. Whether you can get an exemption will depend on:
- The type of car
- Your personal situation
Which vehicles are exempt from car tax?
You don’t have to pay car tax on certain types of vehicle. These are:
- Electric cars
- Steam-powered vehicles
- Agricultural vehicles such as tractors
- Historical vehicles, that is vehicles manufactured before January 1977
- Vehicles used to transport disabled people
- Mobility scooters and other vehicles with a top speed of 8 miles per hour on roads and 4 miles per hour on pavements
You’re also exempt from paying car tax if you have a disability. In either case, you’ll need to fill in the car tax application, then claim the exemption.
Do I pay car tax if I stop driving my car?
You don’t need to pay car tax if you stop driving your car.
Yet, you’ll need to let the DVLA know your car is off the road. To do this, you have to file a Statutory Off Road Notification, or SORN. You can do this online, by phone or by post.
You don’t have to renew a SORN. It stays valid until you tax your vehicle again, sell it, scrap it or remove it permanently. You’ll also still be able to drive if you have a pre-booked MOT or other testing appointment.
Yet, you risk prosecution and a £2,500 fine if you’re caught driving for any other reason.
My car isn’t exempt or SORN. So how much is it to tax?
Car tax works differently, depending on the date you first registered your car. There are three possibilities:
1. Cars registered before 1 March 2001
If your car falls in this category, you pay tax based on engine size. The rates are:
- £160 a year for engines up to 1549 cc
- £265 a year for engines larger than 1549 cc
2. Cars registered between 1 March 2001 and 31 March 2017
In this case, the car tax rates are split into 13 different bands. Your car’s tax band depends on fuel type and CO2 emissions.
Vehicles that emit up to 100 grams of CO2 per kilometre fall in band A, which means they don’t pay any tax. At the other end of the spectrum, petrol or diesel vehicles that emit 255 grams of CO2 per kilometre or more fall in band M and pay a whopping £535 per year.
Here, car tax works in three stages:
- In the first year, you pay tax based on CO2 emissions and fuel type
- From the second year onwards, you pay tax based on fuel type:
- £0 a year if electric
- £140 a year if petrol or diesel
- £130 a year for hybrids and cars that run on alternative fuels such as bioethanol
- If your car’s list price is £40,000 or more, you’ll also have to pay an extra £310 a year starting in year two and ending in year six.
How to calculate your car tax rate online
Are all these different possibilities making your head spin?
No problem. You can also work out how much car tax you have to pay online. To do this:
- Grab your car’s V5c registration document
- Find the 11 digit reference number
- Key it in on the DVLA’s online tool
You’ll automatically be shown the applicable tax rate for your car.
Easy peasy, right?
