Car tax rates 2022/23

Understand car tax rates, including the diesel surcharge - with details for cars registered before and after April 2017

BuyaCar team
Apr 25, 2022

The most recent rate increase due to inflation saw the annual cost of taxing a new petrol or diesel car rise to £165.

This follows the introduction of a diesel surcharge for new car buyers in 2018, which resulted in a large hike in car tax, also known as Vehicle Excise Duty (VED), for many buyers. In some cases, tax rose by more than £300, as the Chancellor penalised buyers of modern diesel cars following greater understanding of diesel emissions.

The changes mean that the savings to be made by choosing cars with the cheapest tax rates are potentially even bigger than ever. For example, vehicles with low carbon dioxide (CO2) emissions registered before April 2017 can be free from tax, even if it’s a diesel. whereas a newer equivalent may cost more than £500 over three years.

Understanding the various tax systems can be complicated. The amount that you pay can depend on a vehicle's carbon dioxide (CO2) emissions, the date it was first registered, the fuel it uses and the price when new.

Scroll down for more details on the tax system, or click below for current and future tax rates.

Am I affected by the car tax changes?

The most recent car tax changes only affect cars that were registered on or after 1st April 2017. If your car was on the road before that date, you will continue to be taxed under the old system, based on CO2 emissions. If you drive an older car that was registered before 1st March 2001, then this will be calculated depending on your engine size. The cost generally rises each year in line with inflation, which will be around £5 for many drivers. Drivers whose cars previously qualified for free tax due to very low CO2 emissions (under 100g/km) under the older tax rating system will continue to benefit from free tax.

If your car was first registered after April 1, 2017, then it will be taxed under the latest system. The first year of tax (paid by the first owner as part of the purchase price) is based on CO2 emissions. In subsequent years, you'll pay a flat rate of £165. You may also need to pay a £355 annual surcharge for the first five years. This applies to all cars registered since April 2017, which had a list price (before discounts) of more than £40,000.

How is new car tax changing?

The government periodically looks into how the tax system might need to adapt as the types of car being sold change. With hybrids and electric cars becoming increasingly mainstream, the government needed to reassess emissions-based car tax. At the moment, electric cars are exempt from tax, but the Treasury is unlikely to accept a large loss of revenue as more buyers trade in petrol and diesel models for battery-powered cars.

No further proposals have yet been officially announced and it is unlikely that the system will change for a number of years, as electric car sales still account for a small percentage of all new cars registered. However, as electric car sales continue to increase rapidly, the government is likely to update the car tax system accordingly to maintain tax revenues.

Car tax rates for vehicles registered since April 1, 2017

How much is my car tax?

The current car tax system will probably cost you much more than you would pay for the same vehicle registered before April 2017. It's split into a first-year rate for brand new cars and then a standard rate for subsequent years.

The standard rate is simple: most drivers will be charged £165 per year. Electric cars are exempt from tax and hybrids (officially classed as alternatively-fuelled cars) get a £10 annual discount.

Owners of more expensive cars will also have to pay a wealth tax. This is a £355 surcharge on cars with a list price of £40,000 or more, which brings the annual tax rate to £490. It's imposed for five years - until your car is six years old.

Tax on brand new cars is included in the purchase price. This first-year tax is based on 13 CO2 emissions-based bands. Electric and hydrogen cars that emit zero CO2 are exempt. If your car emits 120.1g/km, the average for a new car sold when the system was introduced, you will pay £190. The most expensive of the 13 emissions bands costs £2,365 for the first year.

Anyone buying a new diesel car will be bumped up a band for the first year of tax. This can add hundreds of pounds to the bill unless the vehicle complies with the Real Driving Emissions 2 standard (RDE2).

Car tax prices

The table below shows the first-year tax rate for new cars bought now, which is based on CO2 emission bands. It also shows the standard rate that applies in following years.

  • New diesel cars are pushed up by one band, increasing the cost of first-year tax. This will not apply to cars that meet the RDE2 standard (not all cars currently qualify).
  • Owners of hybrid cars (and others classed as alternative fuel cars) receive a £10 annual discount on tax from year 2 onwards
  • Cars with a list price of more than £40,000 when new attract an extra £355 annual charge on the standard rate for five years.
CO2 emissionsDiesel cars that meet the RDE2 standard and petrol cars All other diesel carsAlternative fuel cars
0g/km£0£0£0
1-50g/km£10£25£0
51-75g/km£25£120£15
76-90g/km£120£150£110
91-100g/km£150£170£140
101-110g/km£170£190£160
111-130g/km£190£230£180
131-150g/km£230£585£220
151-170g/km£585£945£575
171-190g/km£945£1,420£935
191-225g/km£1,420£2,015£1,410
226-255g/km£2,015£2,365£2,005
Over 255g/km£2,365£2,365£2,355

Calculating a car's list price for tax

The list price doesn't include any new car discounts, so you may pay much less than £40,000 for a car, but still be liable for the £335 surcharge. The list price includes:

  • The manufacturer's recommended retail price
  • The full price of any additional factory-fitted options
  • VAT
  • Delivery charges
  • The full cost of the battery in an electric car (if the battery is being leased)

Any accessories fitted by a dealership, such as floor mats, do not count towards the list price. Neither does the first registration fee or any warranty, service or insurance packages, according to the DVLA.

Car tax rates for vehicles registered between March 1, 2001 and March 31, 2017

How much is my car tax?

If your car was registered after March 1, 2001 - like most on the road today - then it all depends on how much carbon dioxide it produces. Vehicles that emit 100g of carbon dioxide or less for every kilometre that they drive (100g/km CO2), are exempt from tax. There’s an official CO2 figure for every car produced since then.

The rising number of electric vehicles means that many more cars are exempt from road tax. Even so, the majority of cars still produce more than 100g/km CO2. These are classified into different bands and taxed on a sliding scale, shown in the table below.

If your car is a hybrid, or powered by compressed natural gas (CNG) or liquefied petroleum gas (LPG) then they are taxed as alternative fuel cars.

Car tax prices

CO2 emissionsTax band Petrol/diesel (12 months)Petrol/diesel (6 months)Alternative fuel (12 months)Alternative fuel (6 months)
Up to 100g/kmA£0n/a£0n/a
101-110g/kmB£20n/a£10n/a
111-120g/kmC£30n/a£20n/a
121-130g/kmD£135£74.25£125£68.75
131-140g/kmE£165£90.75£155£85.25
141-150g/kmF£180£99£170£93.50
151-165g/kmG£220£121£210£115.50
166-175g/kmH£265£145.75£255£140.25
176-185g/kmI£290£159.50£280£154
186-200g/kmJ£330£181.50£320£176
201-225g/km*K£360£198£350£192.50
226-255g/kmL£615£338.25£605£335.75
Over 255g/kmM£630£346.50£620£341

 
*including cars that emit over 225g/km that were registered before 23 March 2006

Car tax rates for vehicles registered before March 2001

Car tax rates used to be based on engine size. These were replaced by the current regime in March 2001, but still apply to vehicles registered before then.

Engine size1 year
Smaller than 1,550cc (1.55 litres)£180
Larger than (including) 1,550cc£295

 

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