How does road tax work?

The paper tax discs may have been abolished in 2014, but you still have pay your road tax.

Also known as car tax, Vehicle Excise Duty (VED) or Graduated VED, road tax can be a tad confusing – especially if you haven’t had to deal with it before.

Here’s our comprehensive guide to your road tax requirements:

What is road tax?

All vehicles registered in the UK must be taxed if used or parked on a public road. If they are kept on private property, they must either be taxed or have a Statutory Off Road Notification (SORN).

The amount of road tax you pay depends on the size of your engine, the car’s official CO2 emission rate and the date of initial registration.

The CO2 measurement is taken when it is tested for ‘type approval’, before the model goes on sale. This can be found on the V5C vehicle registration document.

VED bands/rates

Each vehicle will fall into different bands depending on the variables mentioned previously. The Chancellor recently announced that the VED rates for cars, vans, motorcycles and motorcycle trade licences will increase in line with inflation.

This table shows VED rates as of 1 April 2017:


Emissions (g/CO2/km) First-year rate Standard rate
0 £0 £0*
1-50 £10 £140*
51-75 £25 £140*
76-90 £100 £140*
91-100 £120 £140*
101-110 £140 £140*
111-130 £160 £140*
131-150 £200 £140*
151-170 £500 £140*
171-190 £800 £140*
191-225 £1,200 £140*
226-255 £1,700 £140*
over 255 £2,000 £140*

*Cars over £40,000 pay an annual £310 supplement for five years

Vehicles built and purchased between March 2001 and 1 April 2017 will not be affected by these changes, and will stay on the current VED payment plan.

Cars made before March 2001 pay VED based on engine size, as CO2 data is not available. This breaks down as follows:

• Engine 1549cc or smaller – 2016/17 rate = £145 per year
• Engine larger than 1549cc – 2016/17 rate = £235 per year

The Chancellor also announced this year that the government will legislate to exempt classic vehicles from VED payments on a permanent basis from 1 April 2017. This means that vehicles constructed more than 40 years ago will be automatically exempt from paying VED.

How to tax your car:

There are a number of ways to tax your car: online, at your local tax office or (in some cases) over the phone.

You will be sent a tax reminder (V11 licence renewal reminder), but if this doesn’t come you must complete the V5C registration document. You must also have these documents ready:

• Valid certificate of insurance or a cover note
• MOT test certificate
• Appropriate fee

When you’re buying a car

When you buy a car, the tax or SORN doesn’t come with it. You must tax it before if you want to drive it away from the dealer forecourt. You must also have motor insurance before using the vehicle on a public road.

To tax the vehicle, you’ll need the documents mentioned above, and the V5C. If you are waiting for this to be returned by the DVLA, you will need a V5/2 new keeper’s supplement instead.

There you have it – everything you need to know about road tax wrapped up in a neat little bundle!

If you’re interested in any of our new cars, talk to your local Perrys dealer today.