How UK car tax (VED) is calculated in 2025-26

Vehicle Excise Duty — more commonly called car tax or road tax — has become one of the more confusing running costs of owning a car in the UK. Three separate rate regimes sit on top of each other, each applying to a different era of vehicles, and a patchwork of supplements, concessions, and recent rule changes mean two identical-looking cars parked next to each other can attract very different bills. The calculator above handles all of that for you, but it's worth understanding how the numbers are built so you can sanity-check them and plan ahead when buying or selling a car.

The three VED regimes you need to know about

The rate you pay depends almost entirely on when your car was first registered. That single date puts you into one of three systems:

  • Registered before 1 March 2001: a flat annual rate based on engine size. Cars with an engine under 1549cc pay £220 a year; anything bigger pays £360.
  • Registered 1 March 2001 – 31 March 2017: thirteen CO2 bands, A through M. Band A (under 100g/km) pays nothing — which is why so many small diesels from this era became popular second-hand. Band M (over 255g/km) pays £760 a year.
  • Registered 1 April 2017 onwards: a higher "first-year" rate based on CO2, then a flat standard rate from the second year onwards (£195 for petrol and diesel, £185 for hybrids and other alternative fuels in 2025-26).

First-year "showroom tax" on newer cars

The post-2017 regime bundles a first-year CO2 surcharge into the on-the-road price of a new car. The Treasury designed it to nudge buyers towards cleaner vehicles, and at the top of the range it really bites — a car emitting more than 255g/km will cost £5,490 just in its first year's VED. Once you're past that first year, though, everyone pays the same standard flat rate regardless of emissions, which considerably blunts the environmental incentive. Our calculator shows both figures so you can see the step-down: useful if you're the first owner, but largely informational if you've bought a two-year-old car.

The £40,000 "expensive car supplement"

If your car had a list price of more than £40,000 when it was first registered, you pay an extra £410 a year for five years on top of the standard rate — years two through six. This catches a lot of buyers off guard, especially on pre-owned luxury saloons and high-spec EVs. Because the supplement is attached to the first registration, not to you as the owner, buying a two-year-old £45,000 car means you'll still inherit three more years of the surcharge.

DVLA doesn't publish list prices via its free API, so our calculator flags this as "may apply" when your car is in the relevant age window. Cross-check the original manufacturer list price — not what you paid — if in doubt.

How electric and hybrid cars are taxed now

From 1 April 2025, the longstanding concession that exempted zero-emission vehicles from VED ended. New EVs now pay a £10 first-year rate and then the standard flat rate — and the £40k supplement applies to them too, which catches a lot of Tesla Model Y and Polestar 2 buyers. EVs registered before April 2017 stay exempt; those registered between April 2017 and April 2025 paid £0 until the cutoff and have since joined the standard-rate system.

Plug-in hybrids, mild hybrids, and other "alternative fuel" vehicles pay a £10 discount on the standard rate — £185 instead of £195 in 2025-26.

Historic vehicles and other exemptions

Cars first registered more than 40 years ago can apply for historic vehicle tax class, which pays £0 VED — the rolling date means the current cut-off includes cars registered up to 1 January 1985. You still have to go through the taxing process once a year, it just costs nothing. Disabled drivers claiming certain benefits (Higher Rate Mobility Component of PIP or DLA, Armed Forces Independence Payment) can also apply for a full VED exemption on one vehicle at a time.

Paying monthly, six-monthly or annually

Paying your VED upfront once a year is always the cheapest option. Paying by direct debit adds a 5% surcharge for monthly payments and a 5% surcharge for single six-monthly payments. Over the lifetime of a car, monthly direct debit works out around £10–£40 more a year than annual — not huge, but worth knowing if you're cash-flowing the household budget carefully.

What happens when you sell or buy a used car

Since 2014, road tax has not been transferable between owners. When you sell a car, any remaining months of tax are automatically refunded to you by the DVLA (rounded down to the last full month). The buyer has to tax the car themselves before driving it away, using the 12-digit reference on the green new-keeper slip from the V5C. This means anyone buying a car needs to budget for an immediate tax payment, and anyone selling should factor a small refund into the total sale proceeds.

Once you know what your VED is, run a quick tax status check to confirm you're currently taxed, or book your next MOT through Fixaroo to stay on top of the other running costs that tend to land at the same time.