What is road tax and how much is it?

Let’s talk tax…
 
Like an international superspy or master of disguise, road tax goes by many names. You might see it called vehicle excise duty (that’s the official one), vehicle tax, car tax, or even tax disc if you’re old enough to remember the Millennium bug.  
 
No matter what you call it, if you own a car, it’s a compulsory tax. No ifs and buts, you’ll need to pay up each year if you want to drive legally on UK roads (unless you’re one of the lucky ones who qualify for an exemption!)
 
But where does your hard-earned cash go? And how much will you need to pay?
 
Don’t panic; we’re here to help. Trust us to get down into the details and explain all the nitty gritty so you can get on top of all things road tax.

What is road tax (vehicle excise duty)?

Vehicle excise duty, better known as road or car tax, is a bill every car owner faces (with some notable exceptions).
 
It might be hard to believe, but this tax was first introduced over 100 years ago, back in 1888 when there were barely any cars on the road. Unsurprisingly, it underwent a major overhaul in 1920 when car ownership started to become more widespread.
 
Today, it’s an annual tax paid by owners of new and used cars. As soon as you buy your new pride and joy, you’ll need to register to pay tax and it’ll be due each year on that same date.   
 
While payments are enforced by the Driver and Vehicle Licensing Agency (DVLA), road tax actually goes straight to the government and can be spent by the Chancellor of the Exchequer.
 
One big misconception? It doesn’t directly go towards paying for potholes – that’s your local council’s responsibility. However, it does contribute to nationwide projects like large-scale infrastructure and has a role to play in encouraging drivers to make the switch to more environmentally friendly vehicles.

Why is road tax required?

If you ask anyone on the street what road tax is used for, they’ll usually tell you it’s for road maintenance. But that’s not exactly true, at least not in the usual sense. Those potholes that plague your morning commute fall under your council’s remit and don’t usually require funds directly from the government.
 
But that doesn’t mean it’s not an essential tax.
 
The government will mainly use your funds to invest in nationwide infrastructure. That might include building new roads or converting existing routes into smart motorways. In some cases, it will trickle down to local authorities to cover things like new road layouts, car parks, and large-scale resurfacing projects.
 
Road tax also plays a part in the fight against climate change. As the amount you pay each year is partly based on how much pollution your car adds to the atmosphere, it nudges drivers to choose cars that operate more efficiently and release fewer harmful greenhouse gases.

How is road tax calculated?

Exactly how much you’ll need to pay will depend on the payment method you choose as well as the car you drive, how old it is, and how much carbon dioxide it emits.
 
You’ll also pay a different amount based on when the car was registered and whether it’s in its first year of life:

• If your car was registered before 1st March 2001, it’ll be taxed based on the size of its engine.
• Cars registered between 1st March 2001 and 1st April 2017 pay tax based on their official carbon dioxide emissions.
• For newer cars, registered since 1st April 2017, it’s only the first year’s tax that’ll be based on its emissions.

As you might expect, the vehicles that are the highest polluting in that first year will have to pay the most road tax.

Once your wheels are over a year old, it all comes down to your fuel type. Petrol and diesel drivers will pay the same amount, electric vehicle owners are currently exempt from tax, and those who have an alternative fuel car like a hybrid will receive a £10 discount.

How much is road tax for different types of vehicles?

For the first year after your car is registered, the tax you’ll pay is based on your car’s emissions:

Figures correct as of December 2024 

After the first year, you’ll need to pay a fixed amount based on the type of car and how you choose to pay:

Do I need to pay road tax for electric vehicles?

For many years, one of the perks of buying a fully electric car has been that it’s exempt from road tax. It’s one way that the government has been encouraging drivers to go green and make the move away from a petrol or diesel car. Not only can driving an EV benefit the environment but, thanks to incentives like this, it could work out cheaper too if you regularly charge from home and explore EV-specific tariffs.
 
Currently, you won’t have to worry about paying road tax for an EV if:

• The electricity comes from an external source, such as a private or public charging point
• Its electric storage battery isn’t connected to any other source of power when the car is moving
• It runs on hydrogen fuel cells

If your EV doesn’t fall into any of these buckets, then it’s likely to be classed as a hybrid. This means you’ll be eligible for a £10 discount on your tax, but you’ll still have to pay the standard rate.
 
However, big changes are on the horizon.
 
From 1st April 2025, the EV exemption will be removed. All car owners will have to pay the lowest band of tax for the first year and the standard rate from then on.

How can I calculate my road tax cost?

Know your car registration? That’s all you need to find out how much you might pay for your annual road tax. Simply head online, google road tax estimate, and you’ll find several free online road tax calculators pop up. Enter your registration and it’ll generate an estimated cost for you. It’s as simple as that.
 
If you’re buying a brand-new car and keen to understand how much you might pay in your first year, you can find out your vehicle’s emissions rating online too. Head to gov.uk to view the DVLA’s V149 document or use its handy Vehicle Enquiry tool.

Are there any road tax exemptions and discounts?

Some drivers can qualify for a cheeky discount on their road tax – or even better, are totally exempt!
 
Currently, you’ll be exempt from paying annual road tax if:

• You own a vintage or classic car

While the definition of a classic car can be subject to debate, when it comes to vehicle tax, you’ll be exempt once your pride and joy reaches the grand old age of 40.

• You have a mobility-related disability

If your car is registered in your name or in the name of your nominated driver and is only used for your personal needs, you could be exempt if you claim the higher or enhanced rate of any of the following benefits:

• Disability Living Allowance
• Personal Independence Payment
• Adult Disability Payment
• Child Disability Payment
• War Pensioners’ Mobility Supplement
• Armed Forces Independence Payment
• You drive a fully electric vehicle

Until April 2025, fully electric cars are exempt from paying road tax. You’ll also be eligible for a £10 discount if you have a hybrid or alternative fuelled vehicle (AFV).

• Your car is registered SORN

If you don’t plan to drive your car anymore and can store it in your driveway or garage (not on a public road), then you can apply for a Statutory Off-Road Notification (SORN) and won’t need to tax it.

How can I pay road tax and stay compliant?

One of the more comforting things about road tax is that you have options when it comes to making payments.
 
Firstly, you can choose where to pay:

• Over the phone
• Online
• At your local Post Office

No matter which option you land on, you’ll need to have either a copy of your car’s logbook (also known as its V5C certificate), the green new keeper slip, or a reminder letter from the DVLA.
 
Next, decide how to pay. Again, you’ve got three options:

• Pay in one lump sum
• Split into two payments six months apart
• Split into monthly instalments paid via Direct Debit

While paying for the full year in one go is usually the cheapest option, it’s not always the most affordable. If you don’t have the savings ready to go or would rather spread the cost over time and spend that cash on something else (a weekend in Barcelona anyone is top of our to-do list), setting up a Direct Debit to pay monthly could be the most efficient option.
 
If you choose to pay every six months instead, it could help to set a reminder on your phone or in your diary.
 
So, what happens if you miss a payment or fail to pay altogether?
 
Well, if you’re caught driving an untaxed car, you’ll usually receive an out of court settlement fine. Currently, this is £30 plus one and a half times the outstanding vehicle tax. 
 
If you pay late, you could be automatically issued with a late licensing penalty. This is set at £80 and could be reduced to £40 if you pay within 33 days.
 
Still have a balance due? Your case could be escalated to court, where the fine rockets to £1,000 plus fees.
 
Finally, if the police use automatic number plate recognition to catch you driving an untaxed car, you could be issued a fixed penalty notice of up to £1,000.