How to tax a car: complete car tax guide

June 15, 2023 by

Our guide to road tax and how to tax your car has all the info you need on Vehicle Excise Duty

Road tax, officially known as Vehicle Excise Duty, is a fact of life for the majority of motorists, with this annual levy applying to all new cars and most used ones, apart from electric cars (although they too will be charged from 2025), historic vehicles, and the cars of people in receipt of certain benefits.

But how do you go about taxing a car? How do you actually buy road tax, and how much will you need to pay for your vehicle? Our guide details all this, and more.

What is car tax?

Car tax, often called road tax, is a levy the Government charges to people who run cars. Originally called the Road Fund Licence and intended to finance highways, the lines of what road tax pays for have become more blurred over the years, but regardless of whether Vehicle Excise Duty goes towards hospitals, schools, pensions or motorway expansion, the name ‘road tax’ has stuck,  and it’s mandatory for the vast majority of cars, with payments taken annually, biannually or monthly.

Road tax payments are managed by the Driver and Vehicle Licensing Agency, or DVLA, which also administers vehicle registrations and private number-plate sales. But while DVLA administers road tax and sends out reminder letters, the money that’s collected actually goes into something called the Consolidated Fund, which is described by the UK Parliament as “the Government’s general bank account at the Bank of England”.

Do I need car tax?

Most probably. Only two general types of car are exempt from being taxed. The first is any car more than 40 years old, as this means that it now has “historic vehicle” status. Second are cars that are 100% electric, which are exempt from the first year road-tax fee,  the annual charge, and the ‘luxury car supplement’ that applies to vehicles costing over £40,000 from new. This is to encourage more emissions-free driving in the UK, though electric cars will be subject to road tax from 2025.

People in receipt of certain disability benefits are exempt from paying road tax, too, so if you get the higher rate mobility component of the Disability Living Allowance (DLA), the enhanced rate mobility component of Personal Independence Payment (PIP), the higher rate mobility component of Child Disability Payment, the War Pensioners’ Mobility Supplement, the Armed Forces Independence Payment or the enhanced rate mobility component of Adult Disability Payment (ADP), you should be able to claim exemption from road tax; this, perhaps counterintuitively, should be done by applying to tax a vehicle on the Government’s website.

As an aside, if you receive one of the benefits listed above, you may also qualify for a car on the Motability scheme.

You can also make a statutory off-road notification, or SORN, if you are not using the car for an extended period – though as the name suggests, the car must be kept off the road (IE on private land, not parked on the street) unless you tax it again.

How much does car tax cost?

The most common amount of road tax people pay is £180, although this can vary enormously, as there are three road-tax regimes in existence exist (each of which we detail below) depending on when your car with first registered.

The current road-tax regime was introduced on 1 April 2017, and applies to cars first registered from that date.

If your car was registered between 1 March 2001 and 31 March 2017 you’ll pay road tax according to a different set of rules, while a third regime applies to cars first registered prior to March 2001.

The amount of road tax that’s due tends to increase each April in line with inflation, with the most recent rise being implemented in April 2023.

Cars first registered on or after 1 April 2017 – current road-tax system

The current regime, which applies to new cars and any used ones first registered from 1 April 2017, has three key elements to it:

  1. A one-off first-year rate, which is based on how much carbon dioxide (CO2) a car emits
  2. A fixed annual subsequent rate
  3. A ‘luxury car supplement’, which applies to cars costing £40,000 or more and runs from years two (IE after the first, CO2-based annual charge) to years six of a car’s life.

First-year road tax costs

As highlighted above, this is a one-off payment that’s determined by a car’s CO2 emissions and is typically bundled in a new car’s ‘on-the-road’ price when you buy the car. This scale sees more polluting cars (which typically have larger, more powerful engines and cost more to buy) incur higher road-tax costs.

CO2 emissions (g/km) First-year cost
0 £0
1-50 £10
51-75 £30
76-90 £130
91-100 £165
101-110 £185
111-130 £210
131-150 £255
151-170 £645
171-190 £1,040
191-225 £1,565
226-255 £2,220
>255 £2,605

Second-year road tax cost and ‘luxury car supplement’

After you’ve paid the car’s first year of road tax you’ll be liable for a fixed annual payment of £180, with a £10 discount applied for hybrid cars.

There’s also an ‘luxury car supplement’ which costs an additional £390 and applies to cars that cost £40,000 or more (after options, so a £39,999 car with a £2 optional extra attracts this supplement) when new. This tax runs from the second to the sixth year of an expensive car’s life, for an annual cost of £570 over that period, after which tax reverts to £180 a year.

Note these costs assume you pay for your road tax annually. If you pay every six months, there’s a 5% surcharge, and a 10% surcharge if you pay monthly.

Cars first registered on or after March 2001 but before 1 April 2017

As you can see in the table below, different rules apply if your car was licensed between 2001 and 2017; cars from this period are not subject to the luxury supplement, while annual road-tax rates are entirely determined by carbon dioxide emissions.

Do note that cars emitting under 100 grams per kilometre of CO2 pay no road tax (although this will change in 2025, when sub-100g/km cars move up to what is currently the £20 band); these vehicles tend to be diesels from the period with relatively small engines, though many such cars fall foul of Clean Air Zone rules, having to pay to enter zones like London’s ULEZ.

CO2 emissions (g/km) Yearly cost
<100 £0
101-110 £20
111-120 £35
121-130 £150
131-140 £180
141-150 £200
151-165 £240
166-175 £290
176-185 £320
186-200 £365
201-225 £395
226-255 £675
>255 £695

Cars first registered before March 2001

Finally, if your car was first registered prior to March 2001, then things become much simpler. Cars with engines smaller than 1.5 litres pay £200 upfront for twelve months’ tax. If your car’s engine is bigger than that, you’ll pay £325.

Cars first registered before 1 January 1983 are exempt from road tax entirely as they are classed as ‘historic vehicles’.

How do I tax my car?

If you’ve just bought your car, you need to tax it right away. The seller will have given you a green slip called a V5C/2, more commonly known as the ‘new keeper slip’. Near the top of it is a reference number (“Doc. Ref. No.”), which you will need to pay your road tax.

If you already own the car you should receive a road-tax reminder form (called ‘V11″) close to renewal time, which will contain a 16-digit reference number; this, together with the car’s registration, can be used to re-tax the vehicle.

You can also use your car’s V5C logbook, gleaning the ‘document reference number’ and vehicle registration from this.

If you’ve lost your V5C, our guide details how to get a new logbook.

How to tax a car online

The easiest way to tax your car is to use the internet; simply head head to the DVLA’s website and follow the instructions, entering the details from whatever paperwork detailed above you have. You’ll need a credit or debit card, or you can set up a Direct Debit.

How to tax a car at the Post Office

Again, you’ll need one of the documents set out above, but in addition you will need a valid MOT certificate, or if you’re claiming an exemption from having to pay road tax you will need an exemption certificate. You can pay via cash, cheque, card, Postal Order, or set up a Direct Debit if taxing your vehicle at a Post Office.

How to tax a car over the phone

If you would rather pay for your road tax over the phone you should call the DVLA on 0300 790 6802; again, you’ll need an electronic payment method or can set up a Direct Debit, plus you’ll have to have the vehicle registration and a code from your V5C logbook, a V11 reminder form, or the new-keeper slip if you’ve just bought the car.

Is my car taxed?

You can find out if a car is taxed on the official DVLA website. Simply enter the car’s registration, confirm the correct vehicle has been identified and hit ‘continue’. You’ll be told if the car is taxed, and if it has a valid MOT.

Can I cancel my car tax and get a refund?

Road tax used to transferable over to the new owner of a car when a vehicle was sold second-hand, but this practice ended in 2014. Now, the new owner must buy road tax afresh, leaving you to claim for a refund if you’ve sold the car midway through its taxation period.

You can also claim a road-tax refund for tax that’s been already paid in advance if your car is stolen, exported out of the UK, scrapped, written-off following an insurance claim or has been taken off the road by way of a SORN declaration.

Refunds are only paid for complete months, are issued automatically if you tell the DVLA any of the above situations has arisen, and arrive as cheques, sent in the post.

If your road tax refund doesn’t arrive within four weeks, you should contact DVLA.

Car tax FAQs

Can you tax a car without an MOT?

No: your car must have a valid MOT in order for you to tax it.

Can you tax a car without insurance?

No: the DVLA checks its Motor Insurance Database when someone goes through the road-tax-payment process, and tax won’t be issued if the car is not insured with at least the legal minimum third-party insurance.

Can you tax a car without the V5C?

While you can tax a car without a V5C logbook, you’ll have to have either a road-tax reminder, or a new-keeper slip instead.

When does my car tax run out?

When a car’s tax runs out depends on when the tax was paid for, and whether you paid annually, biannually or monthly. To find out when your tax is due to run out simply head to the Government’s website and enter the car’s registration – this will inform you if the car is taxed, and when the tax runs out, if it is.

Does car tax automatically renew?

If you pay by Direct Debit then yes, your road tax will renew automatically. If you pay by debit or credit card, or by cash at a Post Office, it will not renew automatically – though you should get a reminder letter, complete with the reference code you can use when renewing.

Has car tax gone up?

The last road tax increase came in on 1 April 2023, when the budget brought in inflationary increases of 10.1%. The flat annual rate increased from £165 to £180, while the luxury supplement rose from £355 to £390, and there were across-the-board increases for the first-year CO2-based rate, too. Expect a similar increase in April 2024…

Do I still need a tax disc?

No. Tax discs haven’t been mandatory since October 2014.

Can I drive without tax?

No. If you’re caught driving without tax you can be fined £1,000 or five times the amount of tax outstanding – whichever is greater. Your car can also be clamped, with additional release fees then due. DVLA enforcement teams travel around the country with Automatic Number Plate Recognition (ANPR) cameras, which can detect untaxed cars, while the organisation partners with police forces and local councils to catch untaxed cars and their drivers.