How Much Car Tax Should I Pay?

Car Tax, Road Tax or VED (Vehicle Excise Duty) is a compulsory part of car ownership in the UK. With a number of recent changes to the Car Tax bands, you’d be forgiven for being confused about the payments you need to make on your car.

Car Tax bands are based on car emissions - CO2 and, more recently, NOx - and applied to any car driven or parked on a UK road. Cars registered with a Statutory Off-Road Notice (SORN) don’t require Car Tax while cars visiting from outside of the UK are exempt for up to six months. Payments are due every year and are collected into the Government’s consolidated fund, some of which is used to maintain and improve road systems.

As an integral part of car ownership, Car Tax is something that you’ll have to consider whenever you buy a new or used car, petrol or diesel. Failing to pay your Car Tax could result in a fine of up to £1,000. Here’s a guide to the current Car Tax bands to help steer you in the right direction when it comes to making sure that your car is covered.

How much Car Tax should I pay?

Generally speaking, cars with higher emissions are subject to higher Car Tax charges. Recent changes in payment rules mean that the age of your car will also have an effect on how much you pay in Car Tax and the value of your car can now also have some bearing.

There are four different rates of Car Tax to consider:
Cars registered for the first time (new cars)
Cars registered from 1st April 2017
Cars registered from 1st March 2001 to 31st March 2017
Cars registered before 1st March 2001

Is my Car Tax payment the same every year?

When you register a brand new car for the first time, you’ll have to pay an initial Car Tax fee. This can be substantially higher for diesel cars that do not meet the Real Driving Emissions 2 (RDE2) standard. Petrol and qualifying diesel cars will be subject to a lower charge while buyers of new alternative fuel cars (hybrid, biodiesel and gas) will pay even less. Purchasers of new cars with no emissions (i.e. electric cars) will pay nothing. 

This initial charge will cover your car for the first 12 months. Here’s how the payments look:

How much road tax should I pay for a car that’s more than one year old?

After the first year, every car is subject to the same annual payment*, whether petrol or diesel, and RDE2 compliant or not. Cars running on alternative fuels pay £10 less and electric cars with no emissions continue to pay nothing*.

* If your car has a list price of more than £40,000, whatever fuel type, you’ll have to pay an extra £320 every year for five years, from year two to six, on top of the standard Car Tax charge.

Cars first registered between 1st March 2001 and 31st March 2017 are charged according to CO2 emissions, with no distinction between petrol or diesel engines. If your car falls into this category, you’ll have the following amounts to pay:
 

Older cars, first registered prior to 1st March 2001, are taxed differently. Payments are based on their engine size:

As you can see, you can pay for your Car Tax by making an annual payment, two six-monthly payments or 12 monthly installments by direct debit. This can be done online, at a main Post Office or by calling 0300 123 4321. Further details about Car Tax rates and payments can be found on the Vehicle Tax Rates section of the Government website.

If you’re looking to buy a quality used car from the Autostore, our sales advisors will be happy to let you know how much Car Tax you’ll have to pay, so you can budget correctly and drive away happy.