A Guide to Road Tax 2023

Road tax can be confusing, and some avoid understanding it like the plague, but it really is a lot simpler than you’d expect! In fact, by the end of this quick guide, you’ll no longer be skimming over the cost of your road tax with a big question mark above your head. Let’s go through some commonly asked questions like What is Road Tax? give you an idea of how road taxes will affect you now and in the future!

What is Road Tax?

Car road tax is a much nicer way of saying Vehicle Excise Duty (VED) which is the official term, and it describes the tax charged to almost all vehicles driven or stored on public roads. The degree of tax charged depends on a vehicle’s CO2 emission, engine size or fuel type. If you're looking to pay a lower tax, try and find a car with, for example, lower CO2 emissions. Generally, however, the best way to save on your car bills is by lowering your car insurance – you can find a great guide on that here.

Because there are so many cars, road tax is applied differently depending on how old they are (i.e., when they were first registered). The age of registration has three brackets: cars registered after 1st April 2017, cars registered between 1st March 2001 and 31 March 2017, and cars registered before 1st March 2001. Let’s see how much road tax to pay with each of these.

Cars Registered After 1st April 2017

Within the first year of registering a car after the 1st of April 2017, you'll need to pay a special first-year registration tax (also called a showroom tax) which depends on the vehicle's CO2 emissions and covers the first 12 months of ownership. After this period, you will then start paying a standard annual rate of £165 (for any petrol and diesel car). If you're buying a used car that has already been registered, then you will just start paying the fixed annual rate.

To the right is a graph of the first year “showroom” tax you will pay on a new car registered after the 1st of April 2017. As you can see, buying a car with emissions over 150g/km will dramatically start increasing the price you will pay to cover the first 12 months. As a side note, you can pay your road taxes annually, biannually, or monthly at different rates and is simply a matter of preference for you.

Cars Registered After 1st March 2001 and up to 31st March 2017

Buying a car within this bracket no longer follows the same rules as newer cars. You don’t pay a first-year emissions tax - instead, your yearly tax depends on your car’s emissions. Unlike new cars where you will pay £165 a year for any petrol or diesel car, your vehicle will be classed into different categories (bands).

To help you visualise how much you will pay, a graph is shown to the left which maps how much road tax you will pay per year depending on CO2 emissions. How does this data affect you?

  1. Owning a vehicle with less than 100g/km of emissions will mean you won’t pay any road tax
  2. Choosing a vehicle with emissions of 130g/km instead of 120g/km will cause a jump in road tax price
  3. Similarly, choosing a vehicle with emissions of 255g/km instead of 225g/km will cause an even greater jump.

Cars Registered Before 1st March 2001 

Instead of emissions, the tax rate you will pay for these older registered cars will be based on engine size alone. Understanding this is simple. Either a vehicle’s engine will be over 1549cc or under 1549cc. In the former of these, larger engines cause a yearly road tax of £295, while in the latter, smaller engines will pay a yearly road tax of £180.

Need to Know Facts

1. If a diesel car does not meet the Real Driving Emissions 2 (RDE2) standard, you'll have to pay a higher tax rate.

2. If a car or motorhome has a ‘list price’ of over £40,000, you'll need to pay an additional £355 on top of the fixed standard rate from years 2 to 5 (for cars registered after April 2017).

3. The DVLA will refund any full months of tax left over to the previous owner. So, whenever you buy a used car, it will always be untaxed.

4. You can be exempt from road tax if your vehicle is

  • Used by a disabled person
  • A historic vehicle built 40+ years ago
  • An alternative fuel vehicle
  • An agriculture vehicle
  • A steam vehicle

Do Electric Cars Pay Road Tax?

Going back to our helpful graphs, we can see that cars with low emissions will pay less road tax. Because electric vehicles have zero emissions, this means they are exempt from paying road tax. This doesn't mean that you shouldn’t apply for tax – we will get into this soon. The caveat here is that the electricity must come from an external source and not come from any source connected to the vehicle in motion.

BIG FUTURE CHANGE - From April of 2025, any zero-emission car registered after the 1st of April will need to start paying first-year and subsequent year tax rates. The first-year rate will be the same as petrol/diesel cars in the 1-50g/km bracket, while all subsequent years will be the standard rate. This is to ensure all drivers begin to pay a fairer tax contribution considering the carbonless goals of ending fuel car production for 2030. Additionally, EVs registered over £40,00 will need to pay the same £355 additional list price starting from April 2025.

Do You Pay Road Tax on Hybrid Cars?

Hybrid cars such as PHEVs are classed into the ‘alternative-fuel cars’ bracket. These will pay £10 less tax than their petrol or diesel equivalents within the same emissions bracket. For example, registering a hybrid of emissions of 61g/km will cost you £15 in the first year because it classes into the 51-75g/km band and because a petrol equivalent is £25 instead. From the second year, hybrid cars will pay a fixed rate of £155 per year (£10 less than petrol/diesel).

How Long Can You Drive Without Road Tax?

Driving without road tax is a rolling offence, meaning the longer you go on without paying, the more serious it will get. Cars are constantly scanned with Automatic Number Plate Recognition (ANPR) cameras and are fed back to the DVLA database to see who has paid road tax and who hasn’t. If you’re found driving without paying road tax:

- You will receive an LLP letter which fines you £80 (reduced to £40 if you pay within a month of notice)

- Failing to pay will cause another letter to be sent which fines you £30+(1.5*annual vehicle tax rate)

- Failing to pay this will cause the matter to be taken to court and you will be penalised £1000, and your vehicle may be clamped until the matter is solved.

You can take a car off the road with a Statutory Off-Road Notice (SORN) which is free to apply. However, driving with a SORN in place is just as consequential - causing a penalty of £2500. You can drive in an untaxed car if you’re taxing it to a pre-booked MOT test or if your vehicle is an exception like a historic car.

Looking for a car with low emissions? or even an EV to get yourself into the lowest tax bracket? Our experts will be happy to discuss your options with you across our wide range of stock - you can contact them here.