When choosing between a new and used car, road tax is one of many costs to compare. The VED implications differ significantly between the two, and understanding them helps you make a financially sound decision.
New Cars: First-Year VED
New cars pay the first-year VED rate — which can be substantial. A new petrol family car emitting 140g/km pays £340 for the first year. A high-CO2 diesel SUV at 200g/km pays £1,565. These first-year costs are factored into the on-the-road price by dealers. Used cars that are past their first-year period pay only the standard £190 annual rate — making them significantly cheaper on VED over the ownership period.
Used Cars: Standard Rate from Year Two
A used car that is two or more years old is already past the first-year period and pays the standard £190 annual VED (or £10 for an EV). Over a five-year ownership period, a used car costs £950 in road tax versus £1,890 for a new petrol car (first year at £340 plus £1,550 over four years of standard rate). The VED saving on used cars accumulates meaningfully over longer ownership periods.
Low-CO2 Used Cars: Even Better
An electric or low-CO2 used car combines the benefit of low VED with the absence of first-year costs. A three-year-old used EV paying £10 per year for five years costs £50 in total VED. Compare that to a new EV paying £0 first year and £420 per year for five years — £2,100 total including the premium rate. Used EVs offer dramatically lower lifetime road tax costs than new EVs subject to the premium rate.
Premium Rate and Used Car Value
Premium rate surcharges (£410 per year on top of standard rate) only apply for years two through six of the vehicle's life. This means the premium rate applies to both new and used cars in years two through six of their life — but a used car that is past year six no longer pays the premium. A six-year-old premium car costs £190 per year VED, the same as any other petrol car. The premium rate is effectively a six-year cost, shared by both new and used buyers in the relevant period.
Lifetime VED Cost Comparison
For a typical driver keeping a car for five years: a new petrol car costs approximately £1,890 in VED over five years (first-year £340 + four years standard £1,550). An equivalent used petrol car bought at three years old costs approximately £570 over five years (five years standard rate at £190 × 3). Use the car tax calculator at Cartax.online to model specific vehicles and ownership periods.