How are road tax bands calculated?

For most drivers, road tax is another ongoing expense that needs to be factored into car ownership, but how much is it and how does it work? Here, a comparison site for cheap car insurance quotes, mustard.co.uk, explains what you need to know.

What is a road tax band?

Road tax bands set out the amount you’ll need to pay in vehicle excise duty or VED for short (it’s also commonly known as car tax).

But the banding system isn’t quite as simple as choosing the right one from a single list. Instead, the tax band for your car will depend on when it was first registered and its CO2 emissions.

What are the different road tax bands?

There are currently three main tax banding systems depending on whether your car was registered:

• On or after 1 April 2017
• Between 1 March 2001 and 31 March 2017
• Before 1 March 2001

Cars registered on or after 1 April 2017

Under this banding system, you’ll need to pay a ‘first-year’ rate when the car is first registered. This amount is based on its CO2 emissions. After that, you’ll pay the ‘standard rate’ which is a fixed amount.

If your car also has a list price of more than £40,000, you’ll need to pay the ‘expensive car supplement’ too, which is currently £355. This will need to be paid in the car’s second year (alongside the standard rate).

If you’ve got an alternative fuel car (a hybrid, bioethanol or LPG car), you’ll pay £10 less. For instance, a hybrid with CO2 emissions between 91-100g/km will pay a first-year rate of £140 and £155 thereafter.

Cars registered between 1 March 2001 and 31 March 2017

This system is also based on CO2 emissions but uses different thresholds, and the tax bands are also lettered from A to M.

Alternative fuel cars also pay £10 less per band.

Cars registered before 1 March 2001

Older cars only fall into one of two tax band categories based on engine size (cc):

• Under 1549cc, annual road tax costs £180
• Over 1549cc, annual road tax costs £295

What happens if I don’t pay road tax?

If you don’t pay road tax, you can be fined £80 (reduced to £40 if you pay within 33 days), your car can also be clamped. If you choose not to pay the fine, your details can be passed to a debt collection agency. In the most extreme cases, your car could even be destroyed.

Do I need to pay road tax if I’m not driving my car?

If you know you won’t be driving for a while, you can apply for a ‘statutory off road notification’ or SORN for short. You can register for this for free at GOV.UK.

A SORN means you are taking your car off the road so it will need to be kept on private land, which includes keeping it in a garage or on a driveway.

When you take out a SORN, you’ll be refunded any remaining full months of road tax remaining. For example, if you have five and a half months left, you’ll be refunded for the five full months.

Are electric cars exempt from road tax?

If you own an electric vehicle (EV) you don’t currently have to pay road tax, but this is due to change in April 2025.

Under the government’s new rules, EVs will pay the same first-year rate as the lowest CO2 emission cars (1-50g/km) which is currently £10. After that, EVs will be charged the same standard-rate as other petrol or diesel cars. Alternative fuel cars will also be brought in line with this.

How do I buy road tax?

The simplest way to buy road tax is online at GOV.UK. Remember that to tax your car, it’ll also need to have a valid MOT (if applicable) and be insured. Both these details will be checked automatically when you pay for car tax online.

If your car insurance is also up for renewal, it’s a good opportunity to shop around at sites like mustard.co.uk, where you can compare quotes from leading UK insurers in just a few minutes.