Car Tax Explained: Everything You Need to Know to Tax Your Vehicle

Car tax isn't completely straightforward. That's because there are different tax bands, exemptions and various payment options.

So, we'll break it all down and explain everything you need to know about car tax.

What is car tax and why do we pay it?

Vehicle Excise Duty (VED), or car tax as it's more commonly known, is something UK drivers must pay to use public roads. But why does road tax exist?

It's overseen by the Driver and Vehicle Licensing Agency (DVLA), and in turn, road tax is used to contribute towards various projects, including road works and maintenance. VED raises funds for the central government fund, so it doesn't just help pay to fill potholes!

It's nothing new, the very first variation of road tax was introduced in Great Britain as far back as 1889 as a tax on carriages. The system has been regularly updated since to factor in the advancement of the motor industry.

These days it's a legal requirement to pay road tax if you use public roads in the UK. Exactly how much you pay, and your options for paying can vary, but we'll get on to that further on.

Who needs to pay car tax?

You might find yourself asking, 'Do I need to tax my car?'. Other than a list of stated exemptions, the chances are, you probably need to pay tax to use your car.

What you pay for car tax is calculated based on factors such as when your car was registered, the carbon emissions your car produces and how you pay.

Even if you're exempt from paying VED, you still need to tax your car. This still applies if you drive a car classed as a 'historic vehicle' or have a disability exemption, for example.

Storing your vehicle away and not using it on public roads? You can apply to register your vehicle as off the road, this is known as a statutory off road notification (SORN). If your vehicle tax has expired, this will be applied to your vehicle automatically.

You can apply for SORN even if your VED is still valid for a period of time. If you do so, you'll be refunded an amount based on what you pay and any full months of tax remaining.

VED is managed by the DVLA in the UK in addition to vehicle registration. If you live in Northern Ireland, the DVA is responsible for various other motoring services such as driver licensing, testing, enforcement and more.

How much does car tax cost in the UK?

There is no flat fee to tax your car, it largely depends on two factors: The age of your car/when it was first registered and the CO2 emissions it produces.

Beyond this, your final fee can depend on whether you decide to pay monthly, every six months or annually.

For cars registered before March 1 2001, the cost of your tax is based on your vehicle's engine size. These cars are classed as private or light goods (PLG) vehicles less than 3,500kg revenue weight.

Here's an idea of what you might pay*:

*GOV.UK

Cars registered after March 2001 and before April 2017 are placed into 13 bands based on their CO2 emissions. In short, the lower your car's emissions, the less you pay for VED. Here's a breakdown:

For cars registered after April 2017, a new VED system has been introduced. Under this system, cars are subject to what is known as ‘showroom tax’.

This largely refers to the first-year rate of VED for new vehicles on UK roads. Car tax is still based on a car’s emissions, but from the second year onwards, the standard rate of VED is applied. This was introduced as a way to encourage drivers to opt for new cars with low or zero emissions.

After the first year, all petrol and diesel cars registered after April 2017 have to pay a flat fee of £195 a year. Drivers have to pay this in the second and sixth year of ownership on top of the standard VED rate.

Cars with a list price of over £40,000 pay an extra supplement of £425 for five years after the first year.

Below are the current first-year VED rates for petrol, alternative fuel and zero-emission cars registered on or after 1 April 2025.

These rates also apply to diesel cars that meet Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions.

These payments cover your vehicle for 12 months of VED.

Since April 2025, drivers with electric cars are now required to pay for VED for the first time. New electric cars are subject to the standard rate of VED and the £40,000 list price ruling.

Are there any car tax exemptions?

Yes. Electric and zero-emission cars used to be the cheapest cars to tax, as no payment was necessary. However, as of April 2025, these cars are now subject to the standard rate of VED.

There are some cars that are exempt from VED for a variety of reasons, these include:

• Cars manufactured more than 40 years ago

• Cars used by a person who has an

  eligible disability

• Vehicles used by organisations that provide transport for people who have an eligible disability

• Vehicles used for agriculture, horticulture and forestry

• Mowing machines used only to cut grass

• If you have applied and registered your car as off the road with a Statutory Off-Road Notice (SORN)

Even if you're exempt from paying VED, you must still tax your vehicle. You can only use your exemption on one vehicle at any time. So if you have two or more, you'll need to decide which one will be exempt from VED.

How do I pay my car tax?

There are a few methods to tax your car. You used to have to display a car tax disc, but as of October 2014, you no longer have to do so!

Online

The quickest and easiest way to tax your car is by applying online. You'll just need a reference number from a document such as a recent vehicle tax reminder or your vehicle logbook (V5C), for example.

Phone

The DVLA operates a 24-hour tax service via phone. To tax your car over the phone, dial: 0300 123 4321.

One drawback of using this service is that you won't have the ability to pay by direct debit over the phone.

Post Office

You can visit a dedicated Post Office to tax your car, you can find out your closest location via the branch finder.

You'll need to bring a few things with you, including:

• Payment for your vehicle tax (unless exempt)

• Bank account details (if setting up a direct debit)

• A motoring document such as your vehicle logbook (V5C) or the green ‘new keeper’ slip from a logbook

• You may also need to provide evidence of a valid MOT for your vehicle

It's important that you tax your car before the current cover expires, or you can’t legally drive the vehicle.

In some cases it may take up to five working days for the online tax records to update after you have paid for VED.

Going away? You can tax your vehicle up to 2 months before it expires.

Can you pay car tax monthly?

Yes, you can pay for car tax on a monthly basis through direct debit. When it comes to paying for VED, you have 3 options:

• Monthly payments

• Paying every 6 months

• Annual payment

If you decide to pay every 6 months or monthly via direct debit, you'll incur a 5% surcharge for doing so. These options allow you to spread the cost of VED. However, like with car insurance, paying annually actually works out cheaper, as you won't incur a surcharge for doing so.

What do you need to tax your car?

Before you apply for car tax, you'll need to ensure you have some information and documents at hand.

You can only complete the process of taxing your car if you have a reference number. You can find this if you have one of the following documents:

• The vehicle logbook (V5C) in your name

• A recent tax reminder (V11) or a last-chance warning from the DVLA

• The green new keeper slip (you should have this if you’ve just bought the vehicle)

If you don't have any of these documents, you'll need to apply for a new logbook. While you do this, you'll be able to tax your car at the same time.

What is a Statutory Off Road Notification (SORN)?

If your vehicle is off the road and not being driven, you must let the DVLA know. You can do this by applying for a Statutory Off Road Notification (SORN).

It's a legal declaration that your car is off the road and not using UK public roads. If you register your car as off the road with the DVLA, you won't have to pay VED.

If you apply for a SORN while you're car is taxed, you’ll get a refund for any full months of remaining tax.

You can register your car as off the road online, by phone, or by post. You should have the necessary reference numbers at hand found in the car's logbook (V5C) or in a recent tax reminder (V11).

If you don't apply for a SORN, and you don't pay to tax your car, you could be fined £80. You also won't be able to use your car on the road until you tax it again.

You don't need to apply for a SORN for a vehicle you’ve already sold. Once you've registered through the DVLA, you don't need to renew a SORN.

If you need more help, read our guide explaining when you might need a SORN.

What happens if you don't tax your car?

When it comes to car tax, you don't get a grace period. Put simply, if your car tax expires, or you don't have it when driving on UK roads, it's against the law.

Even if you're exempt from paying for VED, you still need to tax your car.

As the registered keeper of an untaxed car, you’ll be issued with a Late Licensing Penalty (LLP) letter. The standard fine is £80, but it can be reduced to £40 if you pay within 33 days.

However, you could be fined up to £1,000 for driving an untaxed car. Your car could also be clamped with a £100 clamp release fee. If fines are left unpaid, the case could be pursued further in a magistrates’ court.

Since October 2014, cars no longer have to display a car tax disc. Instead, police use automatic number plate recognition (ANPR) to detect cars driven without tax.

These cameras are stationed in fixed locations, but are also installed in police and third party vehicles.