How to work out the cost of your car tax

Cars first started to be taxed in 1920 when local councils registered all vehicles. Today, the official name for road tax is Vehicle Excise Duty (VED) and it applies to most cars. However, the rate you pay depends on a number of factors, and it’s a little more complex than it was a century ago.

The road tax system has undergone many changes and will no doubt continue to change in the future. It’s a big part of our economy, generating over £5 billion a year in revenue for the government.

At Car.co.uk, we recommend that you make sure that your car tax is up to date at all times. Knowing how much tax you are liable for is complex and is dependent on a number of different factors.

So, if you’re wondering how to find out how much your road tax will cost, keep reading.

How much will my road tax be?

For cars that were first registered before March 1 2001, tax rates were based on engine size. For those registered after this date, the tax is dependent on CO2 emissions and the type of fuel used. The government structures the tax system this way as it wants to encourage people to purchase ‘greener’ cars because of environmental concerns.

Electric and hydrogen fuel-cell cars are exempt from road tax, and historic cars of over 40 years old are too.

Tax changes are not retrospective. If you own an older car that was subject to an older system of calculating tax, then it remains taxed at the same level, though the tax is subject to increases due to inflation.

If you buy a new car, the first-year road tax is included in the on-the-road price of the car and varies according to CO2 emissions, from £0 for zero-emission cars to £2,135 for cars emitting 255g/km or more. Most new diesel cars are one band higher for the first year.

The new Euro RDE2 standard is for diesel engines that are more environmentally friendly and these pay less tax than non RED2 standard vehicles. RED2 is a new standard and many manufacturers do not yet meet it.

Alternate fuel cars – including hybrids, propane and ethanol – pay less road tax.

For vehicles first registered after April 1, 2017, the tax is normally £145 a year. Hybrids and cars running on alternative fuels, including bioethanol and liquid petroleum gas pay £130.

If the vehicle has a list price of more than £40,000, you pay an extra surcharge of £320, but this is only paid for five years after the second year the vehicle is taxed.

If a car was first registered between March 1 and 31 2017, the car tax rate is based on CO2 emissions. This varies from zero for the lowest emission vehicles, to £570 for very high-emission vehicles.

All these prices are based on a yearly single payment for the tax year 2019/2020. You can pay monthly or every six months and this will make the annual cost higher. The tax you pay is not set in stone and could rise if the government decides to change the rates.

How much will my car tax be?

Calculating car tax is not easy as it depends on the make and model of car, when it was first registered and the fuel type.

The best way to know how much your car tax will be for your vehicle is to use the government's official vehicle tax calculator online.

Answer a few simple questions about the age of the car, the make, model number, and fuel type, and you will be told the annual tax rate, for paying annually and in instalments.

How much does road tax cost?

The standard rate for road tax for vehicles registered after March 2001 and before April 2017 is calculated according to CO2 emissions. These are the 13 CO2 tax bands and the 2019 tax rates:

  • A: Up to 100 g/km - £0
  • B: 101 to 110 g/km - £20
  • C: 111 to 120g/km - £30
  • D: 121 to 130 g/km - £125
  • E: 131 to 140 g/km - £145
  • F: 141 to 150 g/km - £160
  • G: 151 to 165 g/km - £200
  • H: 166 to 175 g/km - £235
  • I: 176 to 185 g/km - £260
  • J: 186 to 200 g/km - £300
  • K: 201 to 225 g/km - £325
  • L: 226 to 255 g/km - £555
  • M: Over 255 g/km - £570

How to calculate road tax

The simplest way to calculate road tax is to go to a website where you can enter your car registration to see the tax rate. You may be charged a small fee for this. You can check if a vehicle is already taxed on the Gov.uk site.

It’s important to note that if your car is parked off a public road for six months or more without using it, you don’t need to pay car tax.

Should you fail to tax a vehicle, there is an £80 fine, which is halved if paid within 28 days. If you are caught driving without road tax you face an on-the-spot fine of up to £1,000. More and more people are falling foul of this because of sophisticated car number recognition systems that spot untaxed cars. If parked up, an untaxed vehicle may be clamped.

How to cancel road tax when selling a car

When you sell your vehicle, whether this is via a car auction  or private sale, first give the green ”new keeper” section of the log book to the buyer. Then tell the DVLA that you have sold your vehicle. This can be done online. Similarly, if you have sold the car to a motor trader, you should also tell the DVLA.

The DVLA will issue a refund for any full months left on the car tax to the registered keeper if the car is sold, scrapped or the ownership transferred.

If you buy a car, you are responsible for paying road tax straight away. In the past, any remaining period on the tax disc was valid, however these were abolished in 2014.

Use Car.co.uk as your guide for buying a vehicle. After you have found your ideal car, make sure it is taxed. The DVLA will let you know the current tax you are required to pay.