UK car tax bands explained

What is car tax?

Since 2001, all cars in the UK (unless exempt) have been subject to road tax after they were first registered.

The amount of car tax you pay may be determined by factors such as when your vehicle was registered, the value of your car - and its CO2 emissions level. However, the UK Government also adjusts its car tax rates in line with inflation, based on the Retail Price Index (RPI), meaning they often increase on 1st April each year.

How much is car tax (VED) in 2023?

The current annual flat rate for car tax is £180. This rate was introduced in April 2023 (covering the 2023/24 tax year).

When did car tax change?

On 1st April 2023, VED rose in line with inflation based on the Retail Price Index (RPI). Only fully electric vehicles (EVs) are currently exempt from VED.

Why do I have to pay car tax?

Most drivers must pay car tax each year, as the money raised is paid into the central government fund and used towards projects that benefit the public including (but not limited to) improvements to the roads.

How is road tax spent?

The money collected from road tax goes to the Exchequer and may be spent on a variety of public services and amenities, such as hospitals, police forces and community projects (in addition to road works and maintenance).

Responsibility for the upkeep of UK roads lies with the Department of Transport, who distribute money allocated to them by the Exchequer to the Highways Agency (who maintain the UK’s strategic road network) and local authorities (who are responsible for the maintenance of all roads except motorways and significant A-roads).

What are the car tax bands in the UK?

UK-registered cars are placed into one of three car tax band categories according to when they were initially registered:

• Cars first registered before 1st March 2001.
• Cars registered between 1st March 2001 and 31st March 2017.
• Cars registered from 1st April 2017 onwards.

How do I find out the tax band for a car?

To determine your car’s tax band, you must first find out when it was registered. Refer to the V5C logbook and find the date of first registration on the first page. From here, you can work out which car tax band date range your vehicle falls under.

If you don’t have your V5C logbook to hand, you might be able to work out your car tax band by checking your car year by registration or checking your vehicle’s details with the DVLA.

Notable car tax changes for 2023

The following first-year car tax increases came into effect for new cars registered in the UK from 1st April 2023:

• 51-75 g/km - increased by £5 to £30.
• 76-90 g/km - increased by £10 to £130.
• 91-100 g/km - increased by £15 to £165.
• 101-100 g/km - increased by £15 to £185.
• 111-130 g/km - increased by £20 to £210.
• 131-150 g/km - increased by £25 to £255.
• 151-170 g/km - increased by £60 to £645.
• 171-190 g/km - increased by £95 to £1,040.
• 191-225 g/km - increased by £145 to £1.565.
• 226-255 g/km - increased by £205 to £2,220.
• Over 255 g/km - increased by £240 to £2,605.

Car tax bands for cars first registered before 1st March 2001

Cars that were first registered before 1st March 2001 are classified as Private/Light Goods (PLG) vehicles, private motor cars - or good vehicles not more than 3,500kg revenue weight.

If your vehicle is in this band, the amount of car tax you’ll pay depends on:

• Whether the engine size is under or over 1550cc.
• Whether you make payment for a 6 or 12-month period.

You can also choose to pay in monthly instalments by Direct Debit if you wish, but the overall cost will be higher.

Tax bands for cars registered on or after 1st March 2001 but before 1st April 2017

Cars that were first registered on or after 1st March 2001 (but before 1st April 2017) are placed into one of 13 emissions bands (labelled A-M, with ‘M’ being the highest) depending on their CO2 emissions level.

Tax bands for cars first registered on or after 1st April 2017

The latest car tax system was introduced because previously, many UK motorists were paying little road tax (or none at all) due to falling CO2 emissions levels, effectively costing the Treasury millions in lost revenue. Therefore, in 2017, the Government revised its tax system for new cars.

Here is an explainer of the car tax criteria that applies to all cars registered from 1st April 2017:

The first-year showroom tax

The owners of cars registered from 1st April 2017 are still liable to pay the ‘showroom tax’. When you first register a new vehicle, you’ll be required to make a tax payment to cover the first 12 months.

The amount you’ll pay is calculated based on the vehicle’s CO2 emissions. If you are registering a zero-emission vehicle, you’ll pay nothing, but if its CO2 emissions level is over 255g/km, you could pay as much as £2,605.

To find out which CO2 emissions band applies to your vehicle, please refer to the table below:

Car tax exemptions

Did benefit-in-kind (BIK) car tax change in 2023?

Benefit-in-kind tax (BIK) is a tax on employees in receipt of perks and benefits in addition to their salary. For example, if you have a company car for private use, you will pay a BIK contribution.

In the 2023-24 financial year, the BIK tax rate for fully electric company cars rose from 1% to 2% - although this rate has now been frozen until 2025.

LPG (Liquified Petroleum Gas) car tax

LPG cars are considered ‘alternative fuel’ vehicles and are subject to car tax. The first-year showroom tax applies to all new LPG cars, followed by a flat car tax rate of £180 per year from the second year onwards.

As of July 2023, the average price of LPG fuel in the UK is 77.1p per litre - a little over half the cost of petrol and diesel fuel (143.5p and 144.9p per litre respectively). So, if you’re looking to cut your fuel spend, an LPG car could be a worthwhile investment.

How to pay your car tax

You can tax your vehicle online via the gov.uk website. To tax your vehicle, you’ll need a reference number from one of the following documents:

• A V11 reminder.
• Your V5C logbook (it must be in your name).
• The green ‘new keeper slip’ (if you have just bought the car).

(If you want to tax your car, but do not have a V5C logbook, please visit our guide ‘How to tax a car without a V5C logbook’.)

You can make payment by credit or debit card.

Visit our guide ‘Why can’t I tax my car online?’ for an explanation of the process to follow if you are unable to pay your car tax through the usual online channel.

How often do you need to tax your car?

When your new car is first registered, you must pay for 12 months’ car tax upfront. This is also known as the ‘showroom tax’. When buying a new car, this tax must be paid before you can legally drive the vehicle away.

After this point, you can choose to tax your car for periods of 6 or 12 months at different rates.

Car tax basics

• Your car must be taxed if you drive or park it on public highways.
• If you do not plan to use your car, you can make a SORN (Statutory Off-road Notification), which declares to the DVLA that you are taking the vehicle off the road.
• However, if you are caught driving an untaxed car with SORN status, you could be liable to pay a fine of up to £2,500.
• Car tax for new cars must be paid at that point of sale. If you buy a new car and drive it away without taxing it, you could be liable for a fine.
• If you are buying a new car, you will have to pay the ‘showroom tax’, which covers the first year of ownership, followed by a different annual car tax rate from the second year onwards.
• If the DVLA’s records show that you are the registered keeper of an untaxed vehicle, a Late Licensing Penalty (LLP) letter containing an £80 fine will be issued automatically.

What happens if you don’t tax your vehicle?

If you are the registered keeper of a vehicle that is not taxed (and does not have ‘SORN’ status), you will receive a Late Licensing Penalty (LLP) letter, accompanied by an £80 fine (reduced to £40 if paid within 33 days).

If you are caught keeping an untaxed vehicle without making a SORN (or using it on the roads), you will receive an Out of Court Settlement (OCS) letter. This will be accompanied by a fine of £30 plus one-and-a-half times the outstanding road tax rate for your vehicle.

What happens if you don’t pay a vehicle tax fine?

If you fail to pay a vehicle tax fine, the case may be escalated to a magistrates’ court – and you may be eligible to pay a penalty of £1,000 or five times the chargeable amount (whichever is higher).

You may face an increased penalty of £2,500 if you are caught driving or parking an untaxed vehicle on a public highway whilst you have a SORN in place.

In either scenario, your vehicle may also be clamped, in which case, a £100 release fee will apply for the first 24 hours. Once your vehicle has been removed, the release fee will increase to £200, together with a storage fee of £21 for each day your vehicle is impounded.

Driving an untaxed vehicle

If you are caught driving a vehicle that is untaxed, you could be fined up to £1,000.

Many modern speed cameras (including those mounted to police cars) are fitted with Automated Number Plate Recognition (ANPR) technology. This allows them to instantly check the DVLA’s database to determine whether passing cars are taxed.

Please visit our guide ‘Driving without tax’ for a full explanation of the penalties that may apply if you are caught driving an untaxed vehicle.

Can you check your car tax band by registration?

Unfortunately, there are no free car check tools that can confirm your car tax band by registration.

However, you can determine your car tax band by looking up your vehicle’s registration date in the V5C logbook.

If your vehicle was first registered on or after 1st March 2001, use our CO2 emissions check tool to find out your vehicle’s CO2 emissions level. With this information, you can determine how much car tax you’ll have to pay by referring to the relevant table in this guide.

Road tax and selling your car

Historically, unused road tax cover could be transferred to the new registered keeper at the point of sale. However, in October 2014, the existing tax disc system was disbanded, the car tax system was brought online – and it was no longer possible to transfer outstanding road tax when selling a car.

According to the current rules, when you buy a car, you must tax it before driving away.

If you sell your car, you must notify the DVLA – and you can also claim a car tax refund for any full months’ unused cover.

Frequently Asked Questions