How to tax a car - your complete guide

Navigate the complexities of Vehicle Excise Duty - also known as road tax - with this comprehensive guide to taxing a car

By Shane Wilkinson

You can now choose from three different options to pay for your car tax (also known as road tax or Vehicle Excise Duty) making it easier than ever. While you can still do it the traditional way by visiting a Post Office in person or over the phone on 0300 123 4321, by far the quickest and simplest way is to pay car tax online at

The cost of your car tax depends on multiple factors, including when your car was first registered, and there are different ways to pay. The cheapest option is usually to pay for the whole year upfront and renew it annually by Direct Debit. It’s also possible to pay for six months at a time, or in monthly installments, but these incur an additional 5% surcharge.

If you’ve just bought your next car, you’ll need to tax it before you take it for a drive. To do this you need the green ‘new keeper’s details’ slip from the car’s logbook, also known as the V5C/2.

If you are the existing owner of a car, you should be sent a reminder from the DVLA about a month before its tax expires. If you pay your road tax by Direct Debit, though, no reminder will be sent as the payment is taken automatically.

What do I need to tax a car?

New keeper green tax slip

To tax a car, you’ll need a reference number from one of four documents issued by the DVLA. Enter this number online and your vehicle’s details will pop up, along with the date that its tax expires.

One of these numbers is the 11-digit reference on your V5C logbook or the 16-digit reference on your V11 reminder - a letter that you’ll be sent around a month before your tax is due to expire. If you pay your tax by monthly direct debit, you will not receive a V11 but will instead have your tax automatically renewed.

If you forget to renew your tax, you may be sent a Last Chance warning letter. This will also have a reference number that you can use.

New owners must use the 12-digit number that’s on the green new keeper slip, which is known as the V5C/2. This must be done straight away once you've purchased the car and before driving it home after purchase.

Your vehicle must be insured and - if it’s over three years old - have a valid MOT. These details are recorded electronically and can be checked by the DVLA, so there’s no need to send in any documents when you tax your car online.

If you decide to pay for your car tax at a Post Office, then you may need your MOT certificate.

How much does it cost to tax a car?

For vehicles registered from 1 April 2017, only zero-emission cars are exempt under the latest car tax rules, meaning that fully electric cars are the only ones that currently qualify. In their first year, cars are taxed at different rates, rising to a maximum of over £2,000 for cars emitting more than 256g/km CO2.

In their second year, all cars are taxed at a flat rate of £155. In addition, from their second year, cars costing more than £40,000 will be liable for an annual additional charge for five years of £335. However, zero-emission vehicles are exempt from these charges.

Car tax rates for cars registered between 31 March 2001 and 1 April 2017 are determined by the amount of carbon dioxide that a car emits, measured in grams per kilometre (expressed as g/km CO2). Rates range from £0 for cars emitting less than 100g/km CO2, to more than £600 for those emitting more than 255g/km.

For cars first registered before 1 March 2001, the rates are based on the size of the engine. If your car’s engine is smaller than 1549cc, the rate is £170 per year. If it’s larger than 1549cc, the rate is £280 per year.

How is car tax recorded?

The old tax disc system was scrapped back in 2014. Now, the only record of your car being taxed is on an electronic database. You can check the details online, but there’s no reminder on your windscreen of when your car needs to be taxed.

Car tax is also no longer transferred with a used car when it is sold or changes ownership - even if it’s registered to another family member.

It expires as soon as you notify the Driver and Vehicle Licensing Agency (DVLA) that the car has changed hands. You need to do this so the vehicle’s ownership documents are updated. Any full months of unexpired tax should be refunded to you, with a cheque sent to the previous registered address of the car. If the new owner doesn’t tax the car themselves, then they could be fined up to £1,000.