New road tax (Vehicle Excise Duty) rates have just kicked in. If you’ve seen your renewal letter or are looking at a new car, here is exactly what you need to know to avoid overpaying and stay legal.
1. The “Standard Rate” (Most Cars Since 2017)
If your car was registered between 1 April 2017 and today, you likely fall into the “Standard Rate” category.
- The Cost: £200 per year.
- The Catch: This is a flat rate. It doesn’t matter if your car is a tiny city car or a larger SUV; once you pass the first year of ownership, this is the bill.
2. The Electric Vehicle (EV) Change
The biggest shift this year is for electric drivers. The “free ride” is officially over.
- Existing EVs: If you own an EV registered after April 2017, you are now paying the same £200 standard rate as petrol and diesel cars.
- Brand New EVs: If you buy a brand-new electric car today, you pay a £10 “First Year Rate”, which then jumps to £200 from the second year onwards.
3. The “Expensive Car” Trap (Read This Before Buying Used)
This is where drivers lose the most money. If a car’s “list price” was over a certain amount when it was brand new, you have to pay an extra £440 a year for 5 years (from years 2 to 6).
- Petrol/Diesel/Hybrid: The limit is £40,000. If the car cost more than this when new, your total annual tax is £640.
- Electric Cars: In a bit of good news, the government raised this limit to £50,000 for EVs this month.
- Pro Tip: This is based on the original price, including options. If you buy a 3-year-old car for £15,000, but it originally cost £42,000, you are still liable for that extra £440 a year. Always check the original list price before buying!
4. Older Cars (2001 to 2017)
For cars registered in this window, your tax is based on CO2 emissions.
- The Good News: If your car emits less than 100g/km (Band A), you only pay £20 a year.
- The Bad News: If you have a “gas guzzler” (over 255g/km), you could be looking at £790 a year.
- Where to check: You can find your car’s CO2 rating on your V5C logbook.
5. How to Save Money (The “Value” Tips)
Stop Paying the “Convenience Tax”
The DVLA allows you to pay monthly via Direct Debit, but they charge a 5% surcharge for the privilege.
- Annual Payment: £200
- Monthly Direct Debit: £210 (Total)
- The Fix: If you can afford the lump sum, pay it all at once to save £10 per car, every year.
The 14-Day Refund Rule
If you sell your car, the tax does not go to the new owner. You must notify the DVLA immediately. They will refund you for every full month remaining. However, the new owner must tax it immediately. This means the government effectively gets paid twice for the month of the sale—one way to “win” is to time your sale/purchase as close to the end of the month as possible.
Check Before You Buy
Don’t take a seller’s word for it. Use the official Gov.uk vehicle checker with just the number plate. It will tell you the exact month the tax is due and the CO2 bracket.
Statutory Off Road Notification (SORN)
If your car is sitting on a driveway or in a garage and you aren’t driving it, don’t pay tax. Register it as SORN online instantly. You’ll get a refund for any full months left, and you won’t owe a penny until you decide to put it back on the road.
