What You Need to Know About Car Taxes in 2023

Please keep in mind that the information in the following article is current as of January 27th, 2023.

Car tax, also known as vehicle excise duty (VED), must be applied for for every car registered in the United Kingdom, regardless of whether any tax is due.

Car tax is due regardless of how much you drive your vehicle. So, if you have a vehicle parked unused on a private road, you must either tax it as usual or file a SORN (Statutory Off Road Notification).

Alternatively, if you need to cancel your road tax, see our guide to canceling road tax.

Navigating the car tax system can be difficult.

The car tax is explained:

Getting your head around VED and navigating the DVLA website can be difficult, especially if you're short on time.

That is why we have put together this ultimate car tax guide - to help you make sense of all the complexities of the UK vehicle tax system, hopefully saving you time and money in the process.

What exactly are the DVLA and VED?

DVLA is an abbreviation for 'Driver and Vehicle Licensing Agency.' You must be registered and licensed with the DVLA to drive in the UK.

The DVLA is a government-run agency responsible for collecting vehicle excise duty (VED), and as such, it maintains a database of every driver and car on UK roads.

The DVLA is in charge of issuing driving licenses and registration certificates. They will also keep track of driver endorsements, e.g. g points on your license, as well as any subsequent disqualifications

They are also the body in charge of collecting car taxes and taking action against vehicle tax evaders.

How much car tax do I have to pay? Rates and bands for car taxes are explained.

The amount of tax you will pay each year is determined by the VED (vehicle excise duty) band in which your vehicle falls. Because the UK government has set targets for climate change and emissions, the VED bands are based on your vehicle's CO2 emissions.

Tax rates vary depending on when your vehicle was first registered. The following are the bands:

• The vehicle was first registered on or after April 1, 2025.
• The vehicle was first registered between April 1, 2017 and March 31, 2025.
• The vehicle was first registered between March 1, 2001 and March 31, 2017.

How much tax should I pay if I first register my vehicle on or after April 1, 2025?

It has been announced that beginning April 1, 2025, zero-emission vehicles will no longer be eligible for the same VED discounts that they previously did. After that date, EVs will pay the same level as the current 'Band B,' which is £10, for the first year they are registered. After that, they will pay a standard rate of £165 plus the £355 expensive car supplement if applicable each time they renew their road tax.

The fees for gasoline and diesel vehicles are not expected to change on April 1, 2025.

How much tax should I pay if my vehicle is registered between April 1, 2017 and March 31, 2025?

For cars registered on or after April 1, 2017, the cost of your first payment is determined by the CO2 emissions of your vehicle.

When it comes to renewing your annual car tax, however, there will simply be a flat rate based on the fuel type of your vehicle, regardless of CO2 emissions.

Vehicles with a list price of more than £40,000 pay an extra £355 in tax per year.

Vehicles with a list price of more than £40,000 (the advertised price before any discounts) will be charged an extra £355 in VED per year. You must pay this rate for 5 years, beginning with the second time the vehicle is taxed.

Some alternative fuel vehicles, typically electric vehicles, are exempt from paying any taxes (those with CO2 emissions of less than 50g/km and costs less than £40,000, to be specific).

The chart below from the government's website will show you your vehicle's first-year rate.

NOTE: If you just want to check rates and see what band your vehicle is in, skip ahead to how to use Parker's car tax checker to see how much tax you'll have to pay.

First-year tax rates for vehicles based on emissions and fuel type (cars registered between April 1, 2017 and March 31, 2025):

This payment covers the first 12 months of ownership of your vehicle.
Image courtesy of https://www.gov.uk/vehicle-tax-rate-tables.

After the first 12 months of taxation, your rate will be flat for the rest of the year.

This rate will be determined by the type of fuel used in your vehicle, regardless of its CO2 emissions. Hybrids, bioethanol, and liquid petroleum gas are all examples of alternative fuel vehicles. To determine your second tax rate, consult the table below.

Car tax rates for second tax payments (cars registered between 1 April 2017 and 31 March 2025 only):

Hybrids, bioethanol, and liquid petroleum gas are examples of alternative fuel vehicles.
Image courtesy of https://www.gov.uk/vehicle-tax-rate-tables.

How much tax will I have to pay if my vehicle was registered between March 1, 2001 and March 31, 2017?

If your vehicle was first registered between March 1, 2001 and March 31, 2017, it will be subject to the old tax bands. The amount you will pay is determined by the amount of CO2 emissions your vehicle emits.

*Includes vehicles with CO2 emissions greater than 225g/km that were registered prior to March 23, 2006.
Source: https://www.gov.uk/vehicle-tax-rate-tables/rates-for-cars-registered-on-or-after-March-1-2001

What if my vehicle was first registered prior to March 1, 2001?

If your vehicle was first registered before March 1, 2001, the tax rate is based solely on engine size. For vehicles first registered prior to this date, there are only two tiers.

Engines up to 1549cc are charged £145. 00 a year The rate for engines larger than 1549cc is £235. 00 a year

NOTICE: The car tax disk has died. You are no longer required to display a tax disc as of October 1st, 2014. The DVLA now uses their database to determine who has and has not paid.

Is my car exempt from car tax?

Some owners are exempt from paying taxes. g Owners of zero-emission vehicles (until 2025), people with disabilities, and vehicles manufactured before January 1, 1974 are all exempt from vehicle tax. These are referred to as "historic vehicles."

Car Tax Checker - How do I use Parkers' car tax checker to determine how much tax I owe on my vehicle?

Don't worry if you're as perplexed as most people when it comes to determining how much CO2 emissions a car emits or the size of its engine. Parker's car tax calculator is now available.

This handy car tax calculator tool will help you figure out how much tax you'll have to pay on your own car or that shiny new motor you've been eyeing up.

Step 1: Go to Parker's Car Tax Checker.

Go to Parker's website and car tax checker page and select the details that correspond to the car you want from the table, then calculate your car tax.

In this example, we've chosen the Ford Focus Hatchback (05-11 models), one of the most common hatchbacks on the UK market:

Step 2: Locate your vehicle.

When you click 'Go,' a table similar to the one below will appear:

The table contains a wealth of useful information, such as annual, six-monthly, and first-year road tax rates, as well as the various levels of CO2 emissions for each model variation.

The first-year rate is shown as 'N/A' for all of these models because the 2005-2011 Ford Focus is clearly no longer available for purchase new, implying that the first owner would have already paid the first-year rate.

In some cases, if you choose a new vehicle, you will see a different rate for the first year.

A new Ford Focus Hatchback RS 2 is on display. 3 EcoBoost equivalents are listed below:

What were the most recent car tax changes in the United Kingdom?

Chancellor Jeremy Hunt announced in the Autumn Statement for 2022 that EVs will be subject to VED beginning in April 2025.

Not only will zero-emission cars and vans have to pay road tax at the same rate as their petrol counterparts, but hybrid cars will also lose their annual basic VED rate discount.

Zero-emission vehicles registered before March 31, 2017 will pay £20 per year.

The Treasury is implementing this policy because the proportion of EV drivers on the road is steadily increasing as we approach the electric switchover in 2030.

How can I pay my car tax at the Post Office, online, or over the phone?

This section of the guide will go over the various methods for paying or renewing your car tax. Any of these methods will require at least one of the following:

• V11 letter from the DVLA (you should receive this road tax notification letter about a month before your VED due date).
• The V5C logbook is the logbook for your vehicle. This should be in your name.
• V5C/2 - the new keeper's contact information If you just bought the car, this information would have come from the previous owner's logbook.
• If it's a Heavy Goods Vehicle (HGV), use V85/1.

If you do not have any of these documents, you will need to apply for a new V5C. To do so, you must complete a V62 form. You can get one of these at your local Post Office. The fee is £25

Your vehicle must also have a valid MOT (valid from the start of your vehicle tax or the date your vehicle tax is issued). Whichever is the most recent)

The DVLA accepts car tax payments in a variety of ways. Simply scroll to the section that applies to you.

How can I pay my car tax online?

Step 1: Navigate to the website of the government's vehicle tax service.

Navigate to the Government's vehicle tax service here and select 'Start now.'

Step 2: Determine whether you have your V11 or not.

You will be directed to a page that requests your V11. Continue by selecting 'Yes' or 'No.'

Step 3: Enter your vehicle's registration number as well as an 11-digit reference number.

We don't have a V11 in our example, but we do have a V5C, so we'll choose that option next. When you click Continue, you'll be taken to the page below.

Enter the registration number and 11-digit reference number for your vehicle. The 11-digit reference is located on the inside of your V5C document at the bottom. 'Doc' should be written there. Ref 'No,' followed by your personal 11-digit number

Step 4: Double-check and confirm your information.

You will then be asked to review and confirm the information you have provided. In this case, the vehicle's tax expired in January 2011. It was declared off-road via SORN (statutory off-road notice), so no tax was required. If the car is to be driven again, it must be taxed.

Step 5: Determine whether you want to pay your car tax annually or monthly.

After clicking continue, you will be given the option of paying your VED monthly or annually.

Paying annually is always less expensive. You will also be asked whether you want to pay by credit/debit card or set up a direct debit (if you want your car tax payment to come out of your account automatically every year).

How do I pay my car tax over the phone?

If you want to pay your car tax over the phone, call the DVLA's vehicle tax service at 0300 1234 321. It is a 24-hour service, but keep in mind that it may cost you up to 10p per minute on a landline and 3p-40p on a mobile. Always double-check with your service provider.

Before making the call, make sure you have at least one of the forms mentioned at the beginning of this section (V11, V5C, or V5C/2) and your vehicle's VRM (vehicle registration mark) handy.

You can pay by phone with a debit or credit card, but you cannot set up a direct debit. You must do this either online or at the Post Office.

How do I pay my vehicle tax at the Post Office?

Many people still prefer to pay their VED at their local Post Office. You must bring at least one of the forms mentioned at the beginning of this section (V11, V5C, or V5C/2).

Simply bring one of these forms to your local branch and a member of staff will be able to assist you. When it comes to payment, you have several options. The following are acceptable at the Post Office:

• Debit Card
• Make checks payable to Post Office Limited.
• Debit Card
• Cash (except by post)
• Postal Service Budget Card
• Mail Order
• Travelers' cheques in sterling
• (£2) by credit card 50 as a handling fee)

How do I cancel my vehicle tax and receive a tax refund?

If your car has been sold, taken off the road, written off, scrapped, stolen, registered exempt, or exported from the UK, you may be eligible for a car tax refund.

You can cancel your car tax by calling the DVLA at 0300 123 4321 if any of the above apply to you.

Your vehicle tax will be cancelled once you have informed the DVLA. If you paid by direct debit, the payment will be stopped and you will be automatically refunded.

Your refund will be mailed to you as a check for any remaining months on your vehicle tax.

The amount is calculated from the date the DVLA receives your information, so make sure to notify them of any changes as soon as possible.

When I sell or declare my vehicle off-road (SORN), how do I get a tax refund?

If you sell your car privately, to an online car buyer, or to a dealer and there is still unpaid tax on it, you will be entitled to a refund from the DVLA.

This should happen automatically because when you sell, you fill out your V5/VC5 with the new owner's information.

This notifies the DVLA that you are no longer responsible for the tax on that specific vehicle. This will also happen if you register your vehicle as off the road (SORN).

Any remaining months on your car tax will be refunded. A cheque will be mailed to the name and address on the vehicle's V5C document. It should arrive in the mail in 6 weeks.

Again, notify the DVLA as soon as possible after selling your vehicle to avoid losing any owed money.

How do I get a tax refund if my vehicle has been totaled?

Writing off a vehicle is essentially selling it to your insurance company, and just like when you sell it, you may be entitled to a car tax refund if there is any remaining tax on it.

If your vehicle has been written off, you must notify the DVLA in order to receive your refund. You can notify the DVLA here. You will be refunded by cheque, which should arrive in the mail in 6 weeks.

When my car is stolen, how do I get a tax refund?

If your vehicle was stolen and your insurance paid out, you will be entitled to a tax refund if your car tax is not due for renewal.

To receive your refund, you must notify the DVLA that your vehicle has been stolen and that your insurance has been paid out. This is possible here. You will be reimbursed by check. This should arrive in the mail in 6 weeks.

How can I get a tax refund if I export my vehicle?

If you are leaving the country or taking your vehicle out of the country for more than a year (this is known as a permanent export), you must notify the DVLA before receiving your tax refund. You can learn how to do so here.

Fill out the V5C/4 page of your V5C logbook and return it to the DVLA (address below).

DVLA,
Swansea,
United  Kingdom
SA99 1BD 

Include a letter with your new address. You will be reimbursed by check. After six weeks, this should arrive at your new address.

How do I get a tax refund if I change the tax class of my vehicle?

If you modify or alter your vehicle, you may be eligible for a car tax refund. For example, if you modify your vehicle to be used by the disabled, you will not be required to pay tax.

You can also downsize the engine or change the fuel type. This may also affect your vehicle's tax class/band. You must first notify DLVA of any changes.

If your tax rate falls, you will begin paying the lower rate on the first of the following month. More information about modifying your vehicle can be found here.

Prepared to sell

Need to sell your car or learn more about documentation or maintenance? More of our guides can be found here, covering everything from the paperwork required when buying and selling to the various notices you may need to file with the UK's driver and vehicle licensing agency.