Car tax: VED rates and increases explained 2024/25

In order to drive a vehicle on the public road in the UK, you’re required to pay Vehicle Excise Duty (VED), otherwise known as car tax. How much you pay depends on a few variables, including the age, fuel type, emissions and list price of your vehicle, although some drivers and cars are exempt.

When shopping for a new car, it’s important to research how much it’ll cost to tax in order to get a clearer picture of running costs. In this guide, we’ll cover the current VED rates for new cars, as well as the rates for older cars, the luxury car surcharge and classic car tax rules. We’ve listed annual and six-monthly VED charges for 2024 below. It’s worth noting, however, that if you want to pay on a monthly basis via Direct Debit then you’ll have to pay a small additional fee.

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In October 2024, the UK Government announced a series of changes to the VED system in the annual autumn Budget, to be introduced from April 2025. The updates will see EVs pay tax for the first time, while some new cars will see their first year VED rate increase by more than £2,000. We’ve covered these upcoming changes at the end of this guide.

What is car tax?

Vehicle Excise Duty (VED), commonly referred to as ‘car tax’ or ‘road tax’ is an annual taxation for all vehicles using the public road. It’s quoted as a yearly fee that can be paid once a year, every six months, or on a monthly basis. There are different VED rules based on the age of your car. 

Here are the key points to remember:

• All petrol and diesel cars registered from 1 April 2017 pay a flat annual VED rate of £190 (reduced to £180 for alternative fuel cars, £0 for EVs).
• Cars registered between 1 March 2001 and 31 March 2017 are taxed based on CO2 emissions.
• Cars registered before 1 March 2001 are taxed based on engine size.
• Brand new cars pay a ‘first year’ VED rate when first registered instead of the flat rate, based on CO2 emissions. The flat annual rate is paid from the second year onwards.
• New cars with a list price of over £40,000 require a VED surcharge for five years, from the second year onwards.
• Historic cars over 40 years old are exempt from VED.
• VED rates usually increase year-on-year with inflation – the flat annual rate will rise from £190 to £195 in April 2025.
• VED rates are changing in 2025 – EVs will pay for the first time, hybrids will lose their discount, and cars emitting more than 75g/km CO2 will see their first-year rate doubled.

How much is Vehicle Excise Duty (VED) for cars registered after 1 April 2017?

For drivers of petrol and diesel cars registered from 1 April 2017, the flat annual rate is currently £190. If your car is powered by an alternative fuel, including mild-hybrids, hybrids, plug-in hybrids, bioethanol or liquid petroleum gas (LPG), the rate is discounted to £180. Electric cars are currently exempt from VED, although this will change in April 2025.

When buying a new car, this flat rate is paid from the second year onwards. A separate, first-year VED rate applies (see further down this article) but this is accounted for in the car’s ‘on-the-road’ (OTR) price. New cars costing £40,000 or more are liable for a luxury car VED surcharge, explained below.

How much is the luxury car tax surcharge?

If you purchase a new vehicle with a ‘list price’ of £40,000 or more, it is classified as a luxury vehicle and commands an additional VED surcharge. This currently stands at £410 for petrol, diesel and alternative fuel cars. In April 2025, it will rise to £425 and zero-emission cars will no longer be exempt.

As with any new car, the first year VED rate applies (see below). From the second year onwards, the £40,000-plus surcharge is paid on top of the annual flat rate. This is payable for five years from the second year of registration; at six years old, the car reverts to the standard flat rate.

What are the first year VED rates 2024?

First year VED rates only apply to those buying a brand new car. It’s a one-off payment based on the vehicle’s CO2 emissions. For most vehicles, it’s higher than the flat annual VED rate, but it’ll be included in the vehicle’s ‘on-the-road’ (OTR) price, along with registration fees, number plates, and delivery costs.

Compared to the first-year rates for petrol cars and diesel cars that meet the latest RDE2 emissions standards, alternative-fuel vehicles are eligible for a £10 discount. Electric cars currently do not command a first year VED payment, however, a £10 tax will be introduced from April 2025, effectively removing the lowest band. 

What are the VED rates for 2001 to 2017-registered cars?

Cars first registered between 1 March 2001 and 31 March 2017 are taxed according to their CO2 emissions. The system is different for cars registered before this period – we have covered these vehicles further down.

Zero and low emissions cars are in band A, which is currently free. In 2025 these cars will move to band B, which currently costs £20 per year.

What are the VED rates for cars registered before 1 March 2001?

If your car was registered before 1 March 2001, it is taxed according to the size of its engine.

If your car was built before 1 January 1984, it is eligible for ‘historic’ vehicle tax exemption. You must apply for the exemption, which can be done online via the Government website. 

If you plan to buy a used car, it’s worth considering its age and VED rate. A car registered in April 2001 could cost twice as much to tax compared to the same car registered in February 2001.

How do I work out how much road tax to pay?

With first year VED rates, annual flat rates and luxury car surcharges to consider, calculating how much road tax you owe can be tricky. Handily, the Vehicle Certification Agency (VCA) has a car tax price checker tool – just enter your car’s CO2 emissions figure, its fuel type and list price and it will calculate how much VED you’re required to pay.

If you’re taxing a used car, the Driver and Vehicle Licensing Agency (DVLA) website allows you to input the car’s registration number to find out its CO2 emissions. If the car was registered between March 2001 and 1 April 2017, you can use this value to work out which band the car belongs to by checking the table above.

If your car was registered before 1 March 2001, you will need to know its engine size. Refer to your car’s handbook for this information, and then use the table above to find out its VED rate.

While business drivers don’t usually have to pay their own road tax, they do need to know about Benefit-in-Kind (BiK) rates. BiK is the reason electric and plug-in hybrid cars are so popular for business users; these are the figures used to calculate company-car tax and we've created a guide to how the system works.

Can I drive without road tax?

No, in most cases, you cannot drive without having paid road tax. Doing so could net you a hefty fine and even result in your vehicle being confiscated by the police. If you’re unsure if your vehicle is taxed, you can check on the DVLA’s website to make sure.

It’s important to remember that VED is not carried over from the previous owner when you buy a used car. The car will have to be taxed immediately before driving it on the public road – there is no ‘grace period’. You can do this by visiting the DVLA website or by phoning the DVLA, ensuring you have the logbook (V5C) or new keeper slip (V5C/2) handy so you can obtain the vehicle’s unique reference number. If you have a car you want to keep in storage and not drive, you can cancel its road tax by making a SORN (Statutory Off-Road Notification), which is valid for 12 months.

What about road tax exemptions?

Aside from drivers with ‘historic’ cars over 40 years old, there are certain scenarios where you may not have to pay VED.

If you are disabled, you may be eligible for a road tax exemption. Visit the Government website to find out specific details and eligibility criteria. The car must be registered in the disabled person’s name or their nominated driver’s name. It’s important to note that this exemption can only be used on one car at a time.

How do I claim a road tax refund?

Under the old tax disc system, a car’s tax could be transferred when it was sold to a new owner. That is no longer the case, as cars are now taxed online.

If you sell a used car before its road tax has expired, you can claim a refund for the remaining tax. You can do this via the DVLA’s website (allow up to six weeks for it to be processed). The buyer of the car must also tax the car immediately before they drive it on the public road.

How do I pay road tax online?

To tax your car online, visit the ‘tax your vehicle’ page on the Government website. You will need a reference number from either your vehicle logbook (V5C), vehicle tax reminder letter (V11) or the green ‘new keeper’ slip if you’ve just purchased a used car. It’s cheapest to pay for a single 12-month payment, although you can pay for six months at a slightly higher rate. It's possible to pay your road tax with a monthly Direct Debit, though doing so will cost slightly more than paying upfront.

The DVLA automatically sends out renewal reminders (called V11 forms), so remembering to tax your car is easy, despite the fact there are no longer tax discs. V11 forms also have a Direct Debit form to fill in on the back, which you can then take to a Post Office if you’d rather not pay online.

Changes to VED in 2025

In October 2024, the UK Government announced a series of changes to the VED tax system, designed to increase the incentive towards buying new electric cars. The changes affect zero emission cars, hybrid cars and petrol and diesel cars in different ways, all of which are outlined below. The changes will come into effect from 1 April 2025.

The flat annual rate of £190 will increase to £195 from April 2025 for all cars registered after  April 2017, in line with inflation. The luxury car surcharge will also increase from £410 to £425.

Zero emission vehicles

Electric and hydrogen cars are currently exempt from paying all forms of VED, including the first-year rate, the flat annual rate and the luxury car surcharge. From April 2025, that will change. Any zero emissions car registered from 1 April 2017 to 31 March 2025 will pay standard annual rate of road tax – £195 per year. New zero emissions cars sold from 1 April 2025 will incur the lowest rate of VED in the first year (currently £10), rising to the annual flat rate of £195 in the second year. 

EVs costing over £40,000 will lose their luxury car surcharge exemption in 2025, as well. Owners will have to pay an additional £425 per year from the second year through to the sixth.

Hybrid vehicles

All alternative fuel vehicles, including hybrids, will lose their £10 VED discount from April 2025. That means that they will pay the same £195 flat annual rate from years two through to six as every other car.

First year VED rates are increasing, too. Hybrid vehicles in the 1-50g/km CO2 bracket will see their first year rate rise from £0 to £110, while vehicles in the 51-75g/km CO2 bracket will face a rise from £20 to £130. All other first-year tax brackets from 76g/km CO2 upwards will be doubled.

Petrol and diesel vehicles

Petrol and diesel cars will be taxed in the same way as before, meaning drivers will still pay a first-year rate based on CO2 emissions, the flat annual rate, and the luxury car surcharge if applicable. The annual rate will rise to £195 and the luxury car surcharge will increase to £425, but the first year rates will see the biggest change.

Every first year VED tax bracket from 76g/km CO2 upwards will see its rate doubled from 1 April 2025 onwards. That means that a car that emits 120g/km CO2 will now pay £440 in the first year rather than £220. For the highest polluting cars, such as the Ford Mustang which emits around 275g/km CO2, the rate will rise from £2,745 to £5,490.

More on UK car tax...

• How much tax will you pay on your new car?
• How to cancel road tax and get a refund
• Classic car tax exemption
• Company-car tax explained
• Electric company car tax explained
• Double cab pick-up tax explained
• How to SORN a car