Car tax rates

All the changes to car tax rates, including the new diesel surcharge

Dominic Tobin
Oct 30, 2018

Car tax will go up in line with inflation next April, increasing the annual cost of taxing a relatively new car from £140 to £145.

It follows the introduction of a diesel surcharge for new car buyers earlier this year, which resulted in a large hike in car tax, also known as Vehicle Excise Duty (VED), for many buyers. In some cases, tax rose by more than £300, as the Chancellor penalised buyers of modern diesel cars.

The changes mean that there are big savings to be made by choosing cars that are cheapest to tax. For example, vehicles that are more than two years old, with low carbon dioxide (CO2) emissions can be free from tax, whereas a newer equivalent may cost more than £500 over three years.

Understanding the varios tax systems isn't straightforward: the amount that you pay can depend on a vehicle's carbon dioxide (CO2) emissions; when it was first registered as a brand new car; the fuel it uses; and the price when new.

Scroll down for more details on the tax system, or click below for current and future tax rates

 

Am I affected by the car tax changes?

The most recent car tax changes only affect cars that were registered since April 2017. If your car was on the road before that date, you will continue to be taxed under the old system, based on CO2 emissions. The cost generally rises each year in line with inflation, which will be around £5 for many drivers. Drivers who haven't had to pay tax before because their car is extremely efficient (with CO2 emissions of under 100g/km) will continue to benefit from free tax.

If your car was first registered after April 1, 2017, then it will be taxed under the new system. The first year of tax (paid by the first owner as part of the purchase price) is based on CO2 emissions. In subsequent years, you'll pay a flat rate of £140. This will rise to £145 in April 2019. You may also need to pay a £310 annual surcharge for five years. This applies to all cars registered since April 2017, which had a list price (before discounts) of more than £40,000.

How is new car tax changing?

At the moment, the car tax system is stable. The chancellor only announced increases in line with inflation in his October 2018 Budget.

The government is currently looking into how the tax system might need to change as sales of electric cars increase. At the moment, electric cars are exempt from tax, but the Treasury is unlikely to accept a large loss of revenue as more buyers trade in petrol and diesel models for battery-powered cars.

No proposals have yet been announced and the system may not change for a number of years, as electric car sales still account for under one per cent of all new cars registered.

 

Car tax rates for vehicles registered since April 1, 2017

How much is my car tax?

The current car tax system will probably cost you much more than you would pay for the same vehicle registered before April 2017. That's because it's designed to earn the government an extra £1.4bn a year by 2020. It's split into a first-year rate for brand new cars and then a standard rate for subsequent years.

The standard rate is simple: most drivers will be charged £140 per year, which will rise to £145 in April 2019. Electric cars are exempt from tax and hybrids get a £10 annual discount.

Owners of more expensive cars will also have to pay a wealth tax. This is a £310 surcharge on cars with a list price of £40,000 or more, which brings the annual tax rate to £450. It's imposed for five years - until your car is six years old.

Tax on brand new cars is included in the purchase price. This first-year tax is based on 13 CO2 emissions-based bands. At the bottom, electric cars are exempt; you'll pay £165 for a vehicle with CO2 emissions of 120.1g/km: the average for a new car sold today. The most expensive of the 13 emissions bands costs £2,070 for the first year.

Anyone buying a new diesel car will be bumped up a band for the first year of tax. This can add hundreds of pounds to the tax bill unless their vehicle complies with next-generation emissions standards. These are due to come into force in 2021, but you can't buy a car that's been certified to the standards yet.

    

Car tax prices

The table below shows the first-year tax rate for new cars bought now, which is based on CO2 emission bands. It also shows the standard rate that applies in following years.

  • New diesel cars are pushed up by one band, increasing the cost of first year tax. This will not apply in future to cars that meet a new emission standard, known as RDE2 (no cars currently qualify).
  • Owners of hybrid cars (and others classed as alternative fuel cars) receive a £10 annual discount on tax
  • Cars with a list price of more than £40,000 when new attract an extra £310 annual charge on the standard rate for five years.

CO2 emissions

Current first year rate

Current standard rate 
(after first year)

First year rate 
(from April 2019)

Standard rate 
(from April 2019)

0g/km

£0

£0

£0£0

1-50g/km

£10

£140

£10£145

51-75g/km

£25

£140

£25£145

76-90g/km

£105

£140

£110£145

91-100g/km

£125

£140

£130£145

101-110g/km

£145

£140

£150£145

111-130g/km

£165

£140

£170£145

131-150g/km

£205

£140

£210£145

151-170g/km

£515

£140

£530£145

171-190g/km

£830

£140

£855£145

191-225g/km

£1,240

£140

£1,280£145

226-255g/km

£1,760

£140

£1,815£145

over 255g/km

£2,070

£140

£2,135£145

      

Calculating a car's list price for tax

The list price doesn't include any new car discounts, so you may pay much less than £40,000 for a car, but still be liable for the £310 surcharge. The list price includes:

  • The manufacturer's recommended retail price
  • The full price of any additional factory-fitted options
  • VAT
  • Delivery charges
  • The full cost of the battery in an electric car (if the battery is being leased)

Any options fitted by a dealership, such as car mats, do not count towards the list price. Neither does the first registration fee or any warranty, service or insurance packages, according to the DVLA.

    

Car tax rates for vehicles registered between March 1, 2001 and March 31, 2017

How much is my car tax?

If your car was registered after March 1, 2001 - like most on the road today - then it all depends on how much carbon dioxide it produces. Vehicles that emit an average of 100g or less of carbon dioxide for every kilometre that they drive (100g/km CO2), are exempt from tax. There’s an official CO2 figure for every car produced in the past 15 years.

The rising number of efficient cars, electric vehicles and hybrids, such as the Hyundai Ioniq above, means that many more cars are exempt from road tax. Even so, the majority of cars still produce more than 100g/km CO2. These are are classified into different bands and taxed on a sliding scale, shown in the table below.

If your car is a hybrid, or powered by compressed natural gas (CNG) or liquefied petroleum gas (LPG) then they are taxed as alternative fuel cars. The rates are further down the page.

  

Car tax prices

CO2 emissions 

Tax band

Current annual rate

Annual rate from April 2019

Up to 100g/km

A

Free

Free

101 - 110g/km

B

£20

£20

111 - 120g/km

C

£30

£30

121 - 130g/km

D

£120

£125

131 - 140g/km

E

£140

£145

141 - 150g/km

F

£155

£160

151 - 165g/km

G

£195

£200

166 - 175g/km

H

£230

£235

176 - 185g/km

I

£250

£260

186 - 200g/km

J

£290

£300

201 - 225g/km

K

£315

£325

226 - 255g/km

L

£540

£555

Over 255g/km

M

£555

£570

  

How much is my car tax for an alternative fuel vehicle?

Alternative fuel cars are powered by something other than petrol or diesel and include hybrids, as well as vehicles that run on compressed natural gas (CNG) or liquefied petroleum gas (LPG). They typically benefit from car tax that’s £10 cheaper than conventionally-powered cars.

CO2 emissions in g/km 

Tax band

Annual rate

Up to 100

A

Free

101 - 110

B

£10

111 - 120

C

£20

121 - 130

D

£110

131 - 140

E

£130

141 - 150

F

£145

151 - 165

G

£185

166 - 175

H

£220

176 - 185

I

£240

186 - 200

J

£280

201 - 225

K

£305

226 - 255

L

£530

Over 255

M

£545

   

Car tax rates for vehicles registered before March 2001

Car tax rates used to be based on engine size. These were replaced by the current regime in March 2001, but still apply to vehicles registered before then.

  • Cars with smaller engines below 1550cc (1.55 litres) pay £145 each year.
  • Cars with larger engines from 1550cc and above pay £235 each year.  

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