Car tax, road tax and VED – the complete guide
What are car tax, road tax and Vehicle Excise Duty? Learn all there is to know about these extra costs for motorists.
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By Tia Harrison-North
Last updated: 24 March 2025
Like it or lump it, we all have to pay car tax (or vehicle excise duty – VED – as it's officially known).
But what exactly is it, why do we pay it, and how do you stay legal?
Here’s everything you need to know.
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Car tax: what is it?
Well, it used to be that Vehicle Excise Duty (VED) – or road tax/car tax, as it's also known – was used to pay for the building of new roads and the fixing of old ones, but that hasn’t been true since before World War II.
Now, the money we pay to use the roads just goes into the big pot of taxation that the government uses to pay for everything.
Car tax is one of the running costs that you'll need to consider when you buy a new car, especially if you want to stick to a budget.
Car tax bands in the UK explained
Car tax rates are based on the standard rate, CO2 emissions or engine size, depending on when the vehicle was first registered.
The tax rate for cars registered before 1 March 2001, for example, depends on engine size, while the rate for cars registered between 1 March 2001 and 31 March 2017 depends on the level of CO2 emissions (emissions levels are arranged in a series of tax bands).
Cars registered after 1 April 2017 pay the standard rate road tax, which is now £195 per year.
In addition, cars with a list price of more than £40,000 are subject to a supplement of £425, known as the expensive car supplement or luxury car tax. This is payable on top of their standard rate from the second to the sixth years the car's on the road.
How much does car tax cost?
If your car was first registered between 1 March 2001 and 1 April 2017, it'll be placed in a car tax band based on its carbon dioxide emissions. Each band aligns with a price that you'll need to pay for your yearly car tax. A car that creates more than 255g/km will be at the most expensive end of the scale.
Electric cars now have to pay road tax (as of April 2025), and the cost will depend on when your EV was registered. We explain the details of electric car road tax costs further down.
For cars with a list price less than £40,000 in 2025, after the first year, the standard price for car tax will be £195.
You can check which band you are in to find out how much it costs to tax your car.
Car tax exemptions - who doesn't have to pay?
Not everyone has to pay car tax. You’re exempt from car tax if you:
Have a disability (such as needing a mobility scooter or electric wheelchair)
Receive War Pensioners’ Mobility Supplement
Receive the higher rate of the mobility component of Disability Living Allowance
Even in those cases, you still have to tax your vehicle, it just won’t cost you anything.
You also don’t have to pay car tax on ‘historic vehicles’, which is a car that's at least 40 years old.
Electric car road tax
We mentioned above that there are changes coming for zero-emission cars in 2025.
Previously, electric vehicles were exempt from road tax.
As of April 2025, the rules will be different:
EVs registered from 1 April 2025 onwards – £10 for the first year, £195 each year after that (standard rate)
EVs registered between 1 April 2017 and 31 March 2025 – £195 each year (standard rate)
EVs registered between 1 March 2001 and 31 March 2017 – £20 each year
EVs registered after 1 April 2025 will also need to pay the expensive car supplement (aka 'luxury car tax') if they have a list price of over £40,000
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What is SORN?
SORN is short for Statutory Off-Road Notification and is how owners register cars with the DVLA when the vehicle isn’t driven or parked on a public road.
If you're not using your car and it's kept off public roads during the tax year, you must ensure that you have a valid SORN, or you'll still be liable for car tax.
You can apply for a valid SORN online or phone the DVLA on 0300 123 4321, 24 hours a day.
When you officially notify the DVLA of a SORN, you will get a refund for any full months of remaining tax.
How to pay your car tax
If you want to check when your car tax is due, you can go online and enter your registration.
When it is time to pay, your car tax must be paid to the Driver and Vehicle Licensing Agency (DVLA).
You can buy car tax for a full year, six months or pay in monthly instalments (there’s a 5% surcharge for six-month or monthly payments).
If you pay annually or every six months, you’ll receive a form called a V11, which is a reminder from the DVLA that your car tax is due. You can then pay your car tax online or at a Post Office.
If you pay by direct debit, you won’t get a V11, but you will get an email or letter telling you when your Direct Debit payments will be taken.
Since October 2014, the DVLA no longer issues paper tax discs. Technological developments such as automatic number plate recognition (ANPR) systems enable it to check that owners are paid up.
What happens if you don't pay your car tax?
If your vehicle is untaxed, you'll first get an Out of Court Settlement (OCS) letter.
You will have to pay £30 plus 1.5 times the outstanding vehicle tax rate.
If you don’t pay that, it is then considered a criminal offence, so the case may be pursued via the Magistrates Court.
The penalty is either £1,000 or five times the amount of tax chargeable (whichever is greater).
If your untaxed car is spotted parked on the road by the authorities, it may also be clamped or impounded.
You will then have to pay to release it: if you don’t, it might be auctioned or crushed.
And you don’t want that, do you?