Road Tax Explained (Jan 2024)
As we dive into the new year, it's crucial for vehicle owners to stay informed about the latest updates on road tax rates. Whether you're a seasoned driver or a first-time car owner, understanding how much road tax will set you back in 2024 is essential for budget planning and ensuring you stay compliant with regulations.
Understanding Vehicle Excise Duty (VED)
Vehicle Excise Duty (VED), also better known as car tax or road tax, is a yearly tax for using a vehicle on public roads in the UK. It has evolved since its introduction in 1937, and today, it contributes to various government expenditures beyond road-related projects.
The road tax landscape is ever-evolving, and 2024 is no exception. To help you navigate this aspect of car ownership, let's break down the key factors that influence road tax rates this year (correct at time of publishing in January 2024 but, of course, this is subject to change):
1. Vehicle Type and Emissions:
One of the primary determinants of road tax is your vehicle type and its emissions. Governments around the world are increasingly focused on promoting environmentally friendly transportation. In 2024, expect to see varying tax rates based on the emissions produced by your vehicle. Electric and hybrid vehicles may enjoy reduced rates or even exemptions to encourage eco-friendly choices.
2. Regional Variations:
Road tax rates can vary significantly based on your location. Different regions or countries may implement their own tax structures, reflecting local priorities and needs. Before planning your budget, be sure to check the specific rates applicable in your area to avoid any surprises.
3. Legislative Changes:
Governments often reassess and adjust road tax policies to align with broader economic and environmental goals. Stay updated on legislative changes in your region, as these adjustments can impact the amount you pay for road tax in 2024.
Keeping track of road tax rates doesn't have to be a daunting task. Most authorities provide easy-to-access online resources or dedicated portals where you can find the latest information. Make it a habit to check these platforms regularly to stay ahead of any updates.
How to find your car’s road tax band
To ascertain the tax band for your car, fefer to your vehicle's V5C logbook and locate the date of the car's first registration and CO2 emissions figure. Once armed with this information, you can easily find your car's specific tax band and the annual cost.
Tax Bands for Cars Registered Before March 1, 2001
For cars registered before March 1, 2001, the classification is based on Private/Light Goods (PLG) vehicles, categorized into two engine size groups – not over 1549cc and over 1549cc. The tax rates vary for each category, and there's an option to pay through Direct Debit with slightly higher overall costs.
Example for over 1549cc:
12 months: £325
Six months: £178.75
12 monthly Direct Debit: £341.25
Tax Bands for Cars Registered After March 2001 and Before April 2017
For cars registered in this period, tax rates are determined by CO2 emissions, with lower emissions correlating to lower tax bands. Special considerations apply to electric and hybrid vehicles, enjoying a £10 reduction compared to regular petrol or diesel cars.
Example bands and rates (correct as at 24/1/24 but subject to change):
Band A (Up to 100g/km): £0
Band B (101-110g/km): £20
Band C (111-120g/km): £35
Band D (121-130g/km): £150
Band E (131-140g/km): £180
Band F (141-150g/km): £200
Band G (151-165g/km): £240
Band H (166-175g/km): £290
Band I (176-185g/km): £320
Band J (186-200g/km): £365
Band K (201-225g/km): £395
Band L (226-255g/km): £675
Band M (Over 255g): £695
Tax Bands for Cars Registered After April 2017
After the April 2017 tax system overhaul, three new road tax bands were introduced – zero, standard, and premium. New cars are liable for the first-year 'showroom tax' based on CO2 emissions, followed by a standard rate of £180 annually from the second year onwards. Those with a new price exceeding £40,000 now incur an additional £390 per year for the first five years, with the five-year time limit starting from the year after the car is first registered.
Example bands and rates (CO2 emissions (g/km) / First year rate / Standard rate*):
1 - 50 (g/km) £10 / £180 *
51 - 75 (g/km) £30 / £180 *
76 - 90 (g/km) £130 / £180 *
91 - 100 (g/km) £165 / £180 *
101 - 110 (g/km) £185 / £180 *
111 - 130 (g/km) £210 / £180 *
131 - 150 (g/km) £255 / £180 *
151 - 170 (g/km) £645 / £180 *
171 - 190 (g/km) £1040 / £180 *
191 - 225 (g/km) £1565 / £180 *
226 - 255 (g/km) £2220 / £180 *
Over 255 (g/km) £2605 / £180 *
*cars with a new list price exceeding £40,000 (including optional extras) incur an additional £390 per year for the first five years after registration (i.e. years 2-6 of the car’s life)
Tax on Zero Emissions Cars (i.e. Electric Vehicles)
Starting April 1, 2025, electric vehicle (EV) drivers in the UK will face road tax for the first time, ushering in significant changes to the 2025 Vehicle Excise Duty (VED) regulations. This adjustment will impact both current and prospective EV owners, introducing new costs to their annual motoring expenses.
Electric car road tax, also known as VED or car tax, is an annual fee levied on motor vehicles used or parked on public roads in the UK. It serves as a means of taxation to generate revenue, contributing to the maintenance and enhancement of road infrastructure.
Traditionally, road tax has been calculated based on emissions levels, with higher emissions incurring higher yearly costs. This approach reflects the idea that vehicles emitting more pollutants and contributing to environmental impact should bear a higher tax burden. However, a notable shift is set to occur in 2025 when zero-emission vehicles and electric cars will be required to pay road tax VED for the first time.
Currently, if you own an electric vehicle (EV), you enjoy the perk of paying zero road tax, making Vehicle Excise Duty (VED) completely free for your electric vehicle.
However, a notable change is on the horizon. Effective April 1, 2025, electric vehicles will be required to pay for VED or road tax. The decision to end the exemption for electric vehicles was announced by Chancellor Jeremy Hunt during the 2022 Autumn Budget, aiming to create a fairer motoring tax system.
Here are the key changes:
New zero-emission cars registered on or after April 1, 2025, will incur the lowest first-year rate of VED (applicable to vehicles with CO2 emissions of 1 to 50g/km), currently set at £10 annually.
From the second year of registration onward, these vehicles will transition to the standard rate, presently £180 per year.
Zero-emission cars first registered between April 1, 2017, and March 31, 2025, will also be subject to the standard rate.
The Expensive Car Supplement exemption for electric vehicles is set to end in 2025. New zero-emission cars registered on or after April 1, 2025, will henceforth be liable for the Expensive Car Supplement. This supplement, currently applicable to cars with a list price exceeding £40,000 for five years, will be imposed.
Zero and low emission cars initially registered between March 1, 2001, and March 30, 2017, currently in Band A, will move to the Band B rate, presently £20 per year.
Zero-emission vans will shift to the rate for petrol and diesel light goods vehicles, presently £290 per year for most vans.
Zero-emission motorcycles and tricycles will move to the rate for the smallest engine size, currently set at £22 per year.
Rates for Alternative Fuel Vehicles and hybrids will undergo equalization.
Car Tax Exemptions
Certain vehicles, such as those used by disabled individuals, historic vehicles, and electric cars (currently, see above!), are exempt from road tax. However, even for exempt vehicles, the application process is essential.
How to Pay Your Car Tax
Paying road tax is a seamless process with online options being the most convenient. Ensure you have the required reference number from documents like a reminder, vehicle logbook, or 'last chance' warning letter. Direct debit is an option but may incur additional charges. Visit this page if you would liek to pay your tax online https://www.gov.uk/vehicle-tax
Road Tax Compliance and Consequences
Failure to tax your vehicle on time can result in penalties and fines. The introduction of ANPR cameras has replaced the traditional tax disc, with penalties ranging from late licensing fees to court proceedings for untaxed vehicles. It’s not easy to get away with having an untaxed car these days - you have been warned!
What Happens to Road Tax When Selling Your Car
Since 2014, unexpired tax cannot be transferred to new owners. Sellers should inform the DVLA of the sale to facilitate the refund of any remaining tax. The new owner should immediately tax the vehicle, you can do this here https://www.gov.uk/vehicle-tax