VED Rates: New costs of the Vehicle Excise Duty Increase

Jack Dreyer | Friday 5th May 2023 8:00am

Car keys on a table with coins

You might know Vehicle Excise Duty by one of its more common names: ‘road tax’ or ‘car tax’. It’s actually a tax that’s neither for roads or cars but, as an ‘excise duty’, intended to tax the negative effects on public health that cars cause.

The yearly payment rose again for petrol or diesel vehicles in April 2023, but why?

Read on to find out.

How is VED calculated?

Vehicle Excise Duty is calculated using the following two factors:

  1. A vehicle’s age
  2. A vehicle’s total CO2 emissions (These are measured using WLTP standards)

As it stands, bigger, older engines tend to produce more CO2, requiring drivers to pay more tax on them.

A new car’s tax cost can now range anywhere from £0 to £2,605 in the first year, depending on its CO2 emissions. All cars then move to a flat annual rate for the second year onwards.

For drivers of petrol and diesel cars registered after 1 April 2017, that flat annual rate is currently £180, and for alternatively fuelled cars (hybrid, bioethanol or LPG) the rate is £170. For cars with a list price of £40,000 or more, an extra £390 tax is applied for the first five years.

Crucially, drivers of cars producing zero emissions - such as electric and hydrogen cars - don’t have to pay car tax at all, even if the list price is more than £40,000.

So, in summary, the amount of VED you pay depends on how old your car is, and how environmentally friendly it is. These tables have everything you need to know about the Excise Duty you’ll need to pay – just look at your last MOT certificate to see your car’s emissions.

VED Tax Rates for Cars Registered After 1st April 2017

CO2 Emissions (g/km) Petrol & (clean) Diesel – First year rate Standard Rate
0 £0 0
0 £0 £180
111-130£210 £180
256+ £180 £180

VED Rates for Cars registered before 1st April 2017

The data above only applies to recently-registered vehicles, but if you happen to have a car registered before 1st April 2017, you’ll have to pay tax a little differently. Cars are split into emissions bands and charged corresponding rates for them.

Car Band CO2 Emissions (g/km) Petrol & Diesel
A Up to 100£0
B 101-110£20
MOver 255£695

Does everyone have to pay VED?

While it is an all-consuming tax, and a legal requirement, not everyone has to pay it. Zero emission vehicles, including electric cars, will continue to pay £0 in VED for the first year.

As well as this, there are a series of exemptions, including (but not limited to):

  • Cars registered between March 1st 2001 and March 31st 2017 with CO2 emissions of 100g/km or less. (You can find this out if you check your V5C registration certificate or look online at GOV.UK)
  • Cars 40 years old or older
  • Drivers with disabilities, provided they meet the necessary criteria
  • Vehicles that are never driven & declared as SORN

Make sure you check regulations carefully before deciding not to pay road tax, or you could find yourself incurring fines, court action, or even getting your car clamped.

Keep you car roadworthy with Kwik Fit

While it’s all well and good paying your road tax, if your vehicle is not maintained properly, it might not even be road worthy in the first place.

When it comes to keeping your car safe, legal, and roadworthy, nothing is more important than a regular service schedule. Book in for an MOT and service at your local Kwik Fit centre today. Or, contact us with any questions you may have.

Any facts, figures and prices shown in our blog articles are correct at time of publication.

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