A guide to vehicle excise duty

Wednesday 6th September 2023

What is vehicle excise duty? 

Vehicle excise duty, also known as VED, is a tax charged on all vehicles using public roads in the UK. The amount of vehicle excise duty due is dependent on the vehicle’s CO2 emissions and is collected by the DVLA.  

How much is vehicle excise duty? 

VED applies to all vehicles registered in the UK that are driven or kept on a public road. You can find out the current vehicle tax rate bands here.  

First-year payments

For fuel-efficient diesel or petrol cars with CO2 emissions of up to 50g/km, £30 is payable for the first year from when the vehicle was first registered and is dependent on the vehicle’s CO2 emissions.  

Vehicles that are less fuel-efficient will pay more, up to a maximum of £2,605.  

Second-year payments 

Most car owners will pay a fixed rate of £165 for the second-year payment onwards, regardless of the CO2 emissions from their vehicle. If a vehicle has a list price of more than £40,000, an extra charge may apply.  

Electric vehicle payments

Currently, electric vehicles (EVs) are exempt and drivers of EVs will not have to pay vehicle excise duty.  

From 2025, EVs that were first registered on or after 1st April 2017 will be liable to pay a lower VED rate in their first year. A standard rate will apply during the second year of registration onwards.  

Who is exempt for vehicle tax duty? 

For some car owners with a disability, free car tax may apply depending on the following: 

• You receive War Pensioners’ Mobility Supplement 
• You receive the Enhanced Mobility Component of Personal Independence Payment
• You have invalid transport, such as a mobility scooter 

Other car owners may be exempt depending on: 

• Whether your car is registered between 1st March 2001 and 1st April 2017, that produces up to 100 grams of CO2 per kilometre driven 
• Whether your car is brand new and produces 0 grams of CO2 emissions as well as a price of less than £40,000 

When is vehicle excise duty paid? 

Depending on how often you pay VED, a 5% surcharge applies. This is applied on VED paid monthly and every 6 months. There is no surcharge if VED is paid yearly.  

Here at Formula One Autocentres, we offer a car tax and MOT reminder service that is automated and tailored to your needs. To find out more, contact our specialist team today or head to your local branch.