UK VED Road Tax Rates In 2024: Everything You Need To Know

Vehicle Excise Duty (VED), commonly known as car tax or road tax, has been leaving a hole in UK motorists wallets for almost 100 years now. But what exactly is it, and why do drivers have to pay it? Keep reading to understand the history of VED, the new changes to the UK’s VED system, and how to work out your own tax rate, depending on the car you own​.

The history of road tax (and why we pay it)

The VED traces back to 1937 when it replaced the previous system of road tax, which had its origins in the taxation of Hackney Carriages in the 17th century. The system has undergone major changes over the years until the introduction of the DVLC (Driver and Licensing Vehicle Centre) in 1974, (which later became the DVLA). In 2014, the traditional tax discs (remember those?) were abolished.

Contributions from road tax amount to a staggering £5 billion per year, which may have you questioning why so many UK roads are still in desperate need of a major upgrade.

Unfortunately, VED tax doesn’t just go towards road improvements and infrastructure changes. It’s actually grouped with other forms of tax - so could be used to improve education, healthcare and so on.

What is the new VED tax rate in 2024?

In April 2024, the UK’s VED rates increased to keep pace with the UK’s high level of inflation.

It’s been four years since the last significant changes occurred in April 2020, with the introduction of CO2 emissions calculations using WLTP figures. This doesn’t mean it will be another four years until the next increase, in fact, it’s expected we’ll see further increases in another year or two due to rising costs which don’t seem to be slowing down.

So what VED tax should you pay? Keep reading for a breakdown...

The two tiered tax system explained​

The UK’s current road tax system is currently split into two tiers.

First year VED​

During the first year of a new car's road presence, VED tax is dependent upon its carbon dioxide emissions. This ensures that vehicles emitting higher levels of CO2 incur increased tax liabilities, in line with the government's environmental and sustainability targets.

Annual VED

After the first year of being on the road, a car then enters the second tier system, which isn’t impacted by CO2 emissions, but rather its initial purchase price and its power source (i.e electrical, hybrid or fuel).​​​

What is the current first year VED road tax rate?

Buying a new car? For new vehicles, first year road tax is included in its (OTR) on-the-road price, and as previously mentioned, is based on its CO2 emissions. 

The rate ranges from £0 for zero-emission vehicles, to a more eye-watering £2,745 for high-emission models emitting 255g/km or more. This means consumers are paying greater attention to emissions and opting for more sustainably friendly models to reduce their upfront costs. Suzuki's lineup, including models like the Ignis, offers low-emission options that keep your first-year road tax minimal. Additionally, the Suzuki Vitara combines low emissions with excellent fuel efficiency, further reducing your VED costs.​​

See our tax band section further head, to find more details on the specific rates. ​​

What is the current Annual VED road tax rate?

For the financial year 2024/2025, the standard annual road tax rate stands at £190, with a £10 discount extended to alternatively fueled vehicles such as hybrids.

However, cars exceeding £40,000 in value will incur an additional £410 annual charge for five years, after which the tax reverts to the standard rate. The additional rate charge begins after the first year VED, meaning from your second year, you’ll pay £600 (£590 for hybrids) per year for 5 years, until you benefit from the reduced £190 rate in year 7. Suzuki's affordability shines here, as most of their vehicles are well below this threshold, ensuring you avoid the extra annual charges. For example, the Suzuki S-Cross provides excellent value without crossing the £40,000 mark.

Remember: even if you negotiate your car price below the £40K mark, the annual VED rate is based on its initial purchase price, so you won’t avoid the increased charge (and this includes trim levels etc!)

What are the tax bands for cars registered before 1 March 2001?

Cars registered before April 2017 adhere to a different tax band structure, primarily based on CO2 emissions, with rates varying from £0 for vehicles emitting up to 100g/km to £735 for those exceeding 255g/km​​

​Registered 1st April 2017 onwards

What are the tax bands for cars registered after April 2017?

Post-April 2017 registrations adhere to a revamped VED system, categorised into three bands: zero, standard, and premium. While the first-year rate hinges on CO2 emissions, the standard annual rate remains fixed at £190.​

Registered March 2001 & before April 2017

What’s happening to electric vehicle tax?​

From April 2025, electric vehicles will see their VED exemptions scrapped,  marking a significant policy shift. Electric car owners will now be subject to a nominal first-year rate of £10 and the standard annual rate thereafter of £180 (although this is expected to increase further with inflation). 

Whilst not a huge amount in the grand scheme of buying a car, losing this additional perk is a blow to the EV market, which is already facing challenges around infrastructure and reliability as we’ve highlighted in previous articles. ​​

How do I find out the tax band for my car?

To determine your vehicle’s tax band you’ll need to dig out your V5C logbook. On the first page you’ll find the date of registration, which you can then use to understand which tax band you fall into using the tables above.

Are there any car tax exceptions?

Car tax exceptions must be applied for, but they usually cover those used by disabled individuals (this includes disabled passenger vehicles and mobility scooters), historical cars (those built more than 40 years ago), and electric vehicles.