Everything you need to know about car tax and VED in 2024
We’ve gathered all the information you need to know to make sense of VED
Our guide answers all your questions about vehicle excise duty tax, also known as road tax
To legally drive your car, you need to be aware of certain taxes. Possibly the most important of these taxes is vehicle excise duty, often abbreviated to VED.
But what is it, and how do you pay for it? We’ve gathered all the information you need to know to make sense of it all right here. Read on to find out what vehicle excise duty is, which vehicles it covers and how you’re supposed to pay.
*What is vehicle excise duty (VED)? *
Vehicle excise duty is a tax paid annually by drivers of vehicles that are driven or parked on public roads. The tax covers the whole of the United Kingdom (that’s England, Wales, Scotland and Northern Ireland).
It covers cars, motorcycles, light goods vehicles and heavy goods vehicles. Taxes on cars aren’t a recent development, but several things have changed over the years.
VED was introduced in its current form in 2001 as part of what the government claimed was a push to reduce the amount of pollutants released into the atmosphere.
Where the confusion comes for many drivers is the name of this specific tax. Despite often being referred to as ‘road tax’, VED isn’t a tax on the road - it’s on the vehicles that use it. Road tax was abolished in the 1930s.
While many of us aren’t fans of taxes, VED does bring in a significant amount of money for the government. It supposedly brought in £7.4 billion in 2022/23 according to the House of Commons library, and this figure is predicted to rise to £9.4bn by 2027/28.
As of 2015’s budget, which was introduced by then-chancellor George Osborne and implemented in 2020 by current prime minister Rishi Sunak, all money raised through VED goes back into maintaining the upkeep of the UK road system.
Further changes came in 2020, partly in a bid to increase the appeal of electric vehicle ownership. VED was uprated in line with the retail prices index (RPI) for cars, vans, motorcycles and motorcycle trade licences, and switched from using the NEDC emissions scale to the WLTP system to establish
*How is vehicle excise duty calculated? *
Since 1999, VED has been calculated according to the CO2 output of your vehicle. Vehicles emitting more pollutants cost more to tax, as part of efforts to persuade drivers to consider buying cleaner vehicles.
Cars registered from 1 March 2001 to 31 March 2017 are taxed based on their CO2 emissions. Cars registered on or after 1 April 2017 pay a first-year figure according to their emissions. This will, of course, be different for every car.
All cars registered on or after 1 April 2017 pay the same flat rate from the second year and beyond, but cars with a list price of more than £40,000 pay a premium, called ‘expensive car supplement’, from years two to six of registration.
This additional cost does not apply to electric vehicles, and this exemption will be in place until 31 March 2025.
For cars registered before 1 March 2001, then the engine size in cubic centimetres (cc) is what’s important. Cars with engines equal to or smaller in capacity than 1549cc (roughly equivalent to 1.5 litres) cost £170 a year, assuming they pay upfront for 12 months. Meanwhile, cars with engines larger than 1549cc cost £280 a year.
*VED changes from 2024*
The Chancellor of the Exchequer confirmed VED would increase from 1 April 2024 as part of the spring budget.
The rises, which are based on inflation rates from the Retail Price Index, mean many drivers will have to pay more tax. For example, the thirstiest, most polluting cars will be charged as much as £140 more a year than in 2023. Some electric car drivers will also need to pay more from this year.
However, some drivers may be better off - particularly if their car was first registered before 2017. Read on for a detailed outlook of all the VED rates from 1 April 2024.
The basic flat rate for VED is £190.
*Tax bands for cars registered from April 2017*
In April 2017, the government introduced a new method of taxing certain vehicles, replacing the traditional system, based on CO2, with three new tax bands. These bands are zero, standard and premium.
These new changes were introduced as new cars are producing fewer emissions every year, with some drivers paying heavily reduced tax rates.
Vehicles produced from 2017 are still required to pay the first-year figure based on their tax emissions (see table below). From the second year onwards, you’ll pay a standard rate of £190 per year.
New cars with a value (list price) of more than £40,000 land in the premium car tax band From years two to six of registration. You'll need to pay £410 per year on top of the £190 standard rate for five years, starting from the second year the car is registered.
VED and the first-year standard rate of £10 will apply to electric cars from 2025. See the table below for full figures for cars registered from April 2017 and onwards.
CO2 Emissions (g/km) First year rate Standard rate
1-50 £10 £190
51-75 £30 £190
76-90 £135 £190
91-100 £175 £190
101-110 £195 £190
111-130 £220 £190
131-150 £270 £190
151-170 £680 £190
171-190 £1095 £190
191-225 £1650 £190
226-255 £2340 £190
Over 255 £2745 £190
*Tax bands for cars registered from March 2001 and before April 2017*
As mentioned above, VED is calculated using the amount of CO2 emissions produced by your car. There are 13 bands you need to be aware of, labelled A to M.
Cars that produce less than 100g/km, like an electric car, will still pay no road tax, but prepare for this to change in 2025 when they’ll move into Band B.
Read the table below to see how much tax you’ll pay for cars registered from March 2001 to April 2017.
VED band CO2 Emissions Annual rate
A > 100g/km £0
B 101-110g/km £20
C 111-120g/km £35
D 121-130g/km £160
E 131-140g/km £190
F 141-150g/km £210
G 151-165g/km £255
H 166-175g/km £305
I 176-185g/km £355
J 186-200g/km £385
K 201-225g/km £415
L 226-255g/km £710
M Over 255g/km £735
*Is my car exempt from VED?*
Some cars are exempt from the VED tax. Perhaps most notably, drivers of electric cars do not need to pay. This also includes cars powered by a hydrogen fuel cell. However, drivers of hybrid vehicles must pay.
Historic vehicles - that’s cars made before 1 January 1983 - are also not required to pay VED, so, luckily, your Ferrari 250 GTO is safe to drive on the road without further pennies.
Cars used to transport disabled passengers - referred to as disabled passenger vehicles – also do not have to pay VED. You can also claim a disability exemption if you’re disabled and you drive your car, but this can only be used on one vehicle at a time.
VED also does not apply to mobility vehicles and powered wheelchairs, so long as they have a maximum speed of 8mph on the road and are limited to 4mph on pavements.
Outside of standard passenger cars, vehicles that are used for agriculture, horticulture and forestry are also VED exempt. This includes tractors, light agricultural vehicles and ‘limited use’ vehicles. These aren’t allowed to drive more than 1.5km on a public road.
Steam vehicles are also exempt. Great news for the Doble Model E owners club.
If you own a car but don’t drive it on public roads, then you’re also exempt, although you’ll have to declare it to the DVLA. This is called a Statutory Off Road Notification, or SORN, and you can declare it here.
Be aware that if you don’t let the DVLA know that you want the car registered as off the roads, you’ll be liable for road tax even if the car doesn’t move. Conversely, if you want to take the vehicle back onto public roads, you’ll need to pay the appropriate amount of VED before you do.
*How do I pay for VED? *
First, use our helpful guide to find out how much you need to pay. You can find this further down the page. Once you’ve done that, you can pay your VED tax in a variety of ways.
To pay online, click here to access the official government website. You’ll need either a credit or debit card, plus one or more of the following documents to hand:
- The V11 reminder letter that was sent to you when your existing tax was running out
- The car’s V5C registration document, which must be in your name
- The V5C/2 new keeper supplement if you’ve just bought the car
- The ‘last chance’ warning letter sent to you if you’re about to end up on the wrong side of the law for not either paying or declaring a SORN
If you don’t want to pay online, you can pay directly over the phone by calling 0300 123 4321. Be warned, though, that this line is not free. You can read about the charges here.
You can also pay at any post office that can process vehicle tax. You’ll need to bring one of the following:
The V11 reminder letter that was sent to you when your existing tax was running out
- The car’s V5C registration document, which must be in your name
- The V5C/2 new keeper supplement if you’ve just bought the car
You may also need your MOT test certificate, valid for the start of the new tax period, and a valid Reduced Pollution Certificate if the vehicle has been modified to cut its emissions. In Northern Ireland, you’ll need to bring your insurance certificate or cover note.
It’s important to note that the exact amount due can vary slightly, depending on whether you pay for six months or 12 months, and whether you pay all at once or in instalments. You can see a full breakdown of the charges by going to the DVLA website.
*Do I need to display a tax disk? *
Unlike in the past, you don’t need to wait for a tax disc to be sent for display in the vehicle’s window. The tax disc system was abolished in 2014.
However, it’s important to note that VED no longer transfers to a new owner when you sell or buy a car. The new owner will need to tax the car afresh and they’ll need to do so before they drive the car.
*Taxing your car for the first time *
If your car is brand new and you’re taxing it for the first time, then the costs are slightly different again. The below prices are only applicable the first time a car is taxed. After that, it follows the tables above.
The system rewards drivers of new, low-emitting cars with a lower-than-usual payment for the first year, but it smacks high-emitting vehicles with a fairly stiff initial charge.
The prices are for 12 months and are payable only in a single payment. You can see further details here.
Goods vehicles and motorbikes have their own VED system which you can find more about here.