What is Vehicle Excise Duty in the UK?

Vehicle Excise Duty (VED), commonly called road tax, is a annual tax on all vehicles registered in the UK. It funds road maintenance and infrastructure. The amount you pay is based on your vehicle is CO2 emissions — the lower the emissions, the lower the tax. You must tax your vehicle even if you do not use it regularly on public roads.

How is UK road tax calculated?

UK road tax is calculated based on your vehicle is CO2 emissions. New vehicles are placed in a VED band (A through M) based on their CO2 output. First-year tax is higher, then a standard annual rate applies from year 2 onwards. Zero-emission vehicles cost GBP 0 to tax. Petrol and diesel cars over 100g/km pay GBP 180/year from year 2.

Do I have to pay road tax if I do not drive my car?

Yes. Road tax is payable on all registered vehicles regardless of use. If your vehicle is not being used on public roads, you must register a Statutory Off Road Notification (SORN). While SORN is active, you do not pay road tax. Driving without tax or SORN is illegal.

What happens to road tax when I sell my car?

Road tax does not transfer with the vehicle. When you sell, the new owner must tax the vehicle themselves. You receive an automatic refund for any unused complete months remaining on your road tax. The refund is calculated from when the new owner registers the vehicle in their name.

Why do electric cars pay no road tax?

Electric cars emit zero CO2, placing them in VED Band A (0g/km). Vehicles in Band A pay GBP 0 in road tax both in their first year and in subsequent years. This zero-emission incentive is part of the UK government is policy to encourage electric vehicle adoption and reduce transport emissions.

UK Vehicle Excise Duty Explained 2026

Vehicle Excise Duty (VED) is one of the oldest taxes in the UK, dating back to the Vehicle Licence Duty of 1888. Today, it is known as road tax and applies to all vehicles registered in the UK. This guide explains exactly how it works. ITV.es and DGT.

What is Vehicle Excise Duty

Official Definition

Vehicle Excise Duty (VED) is a tax levied on all vehicles registered in the United Kingdom that are used or kept on public roads. It is commonly called:

Road tax
Car tax
Vehicle tax
Car tax (road fund licence)

What It Funds

Road tax revenue goes into the General Fund of the Treasury, not directly into road maintenance as the name once suggested. Despite the "road" in the name, VED does not specifically fund roads — it is general taxation.

Legal Requirement

Driving without valid road tax is:

Illegal under the Road Vehicles (Registration and Licensing) Regulations 2003
Punishable by a fine of up to GBP 1,000
Can result in your vehicle being clamped or seized

How VED is Calculated

The Role of CO2 Emissions

VED is primarily based on your vehicle is CO2 emissions:

| CO2 Output | VED Band | First-Year Rate |

|-----------|---------|----------------|

| 0g/km | Band A | £0 |

| 1-100g/km | Band A | £0 |

| 101-110g/km | Band B | £30 |

| 111-120g/km | Band C | £130 |

| 121-130g/km | Band D | £160 |

| 131-140g/km | Band E | £195 |

| 141-150g/km | Band F | £225 |

| 151-165g/km | Band G | £285 |

| 166-175g/km | Band H | £335 |

| 176-185g/km | Band I | £375 |

| 186-200g/km | Band J | £435 |

| 201-210g/km | Band K | £495 |

| 211-225g/km | Band L | £585 |

| 226-255g/km | Band M | £785 |

| Over 255g/km | Band M | £2,605 |

First Year vs Standard Rate

First year:

Higher rate based on CO2 band
Covers the first 12 months of registration
Paid when you first register the vehicle
Must be paid to complete registration

Year 2 onwards:

Standard rate applies
GBP 180/year for petrol/diesel over 100g/km
GBP 190/year for alternative fuel vehicles
GBP 0/year for zero-emission vehicles
Renewed annually

Who Pays VED

Registered Keeper

The person or organisation listed as the registered keeper on the V5C log book is responsible for road tax.

This means:

You tax the vehicle in your name
You are liable for any penalties
You receive any refunds
Tax follows the keeper, not the vehicle

Finance Companies

When a vehicle is on finance:

The finance company is the registered keeper
They are responsible for road tax
Or the agreement specifies who pays
Check your finance agreement terms

Company Vehicles

For company cars:

The company is the registered keeper
Company pays road tax as a business expense
Employee may have benefit-in-kind tax liability
Corporation tax deduction available

Exemptions and Reductions

Vehicles Exempt from VED

| Exemption Type | Vehicles Included |

|--------------|------------------|

| Zero emissions | Pure electric vehicles |

| Historic vehicles | Cars built before 1 January 1983 |

| Disabled vehicles | Registered disabled with appropriate vehicle |

| Agricultural vehicles | Agricultural tractors and equipment |

| Mobility vehicles | Motability vehicles |

| Emergency vehicles | NHS, police, fire service vehicles |

Reduced Rates

Alternative fuel vehicles pay £190/year (vs £180) from year 2.

This includes:

Hybrids (self-charging)
Plug-in hybrids
Bioethanol vehicles
LPG-converted vehicles

How to Tax Your Vehicle

Online (GOV.UK)

Fastest method:

1. Visit GOV.UK/tax-vehicle

2. Enter your vehicle registration number

3. Confirm your keeper details

4. Choose payment method

5. Receive tax disc electronically

Payment options:

Debit/credit card
Direct debit (annual or monthly instalments)
BP PayPoint (cash)

At the Post Office

Most Post Offices can process vehicle tax:

1. Take your V5C/vehicle registration certificate

2. Take your driving licence

3. Pay by cash or card

4. Receive temporary tax disc

Monthly Direct Debit

For vehicles over £100 annual tax:

Set up direct debit at GOV.UK
Pay in 12 monthly instalments
Slight admin fee per month
Useful for spreading costs

SORN: Off-Road Notification

When You Need SORN

You must declare SORN if:

Your vehicle is not being used on the road
You are storing the vehicle off-road
Your road tax has expired and you are not renewing
Vehicle is undergoing repair

How to Declare SORN

Online:

1. GOV.UK/declare-off-road-vehicle-tax

2. Enter vehicle registration

3. Confirm keeper details

4. Submit declaration

By post:

Write to DVLA Swansea with your vehicle registration and keeper details.

SORN Duration

SORN runs for 12 months
Must be renewed annually
When tax is renewed, SORN automatically ends
A new SORN can be declared at any time

Key Takeaways

1. VED is based on CO2 emissions — lower emissions = lower tax

2. First-year rate is higher than subsequent years

3. Electric vehicles cost £0 road tax forever

4. Standard rate is £180/year for petrol/diesel from year 2

5. Tax follows the keeper — not the vehicle

6. Road tax does not transfer when you sell

7. Declare SORN if keeping vehicle off-road

8. Zero-emission incentive makes EVs free to tax for life

Understanding VED helps you make informed vehicle purchasing decisions. The £0 road tax for electric vehicles is a significant lifetime saving compared to petrol or diesel alternatives.

Official Resources: ITV.es - ITV Booking | DGT - Direccion General de Trafico

UK Vehicle Excise Duty Explained 2026 — Complete VED Guide