Road Tax Explained: How UK Car Tax Works

Road tax, or Vehicle Excise Duty to give it its proper name, catches a lot of people out when they buy a car. It doesn’t come with the car any more, the rules depend on when the car was first registered, and electric cars now pay it too. Here’s how it works.

The tax doesn’t transfer with the car

Any tax left on a car is cancelled when it changes hands. The seller gets a refund for any full months left, and you need to tax it before you drive it away.

You can do it online in a few minutes with the reference number on the V5C new keeper slip, the green one. DVLA checks are automatic, so don’t drive it home first and plan to sort it later.

What you pay depends on when the car was registered

• Registered from 1 April 2017: a first-year rate based on CO2, then a flat standard rate every year after
• Registered between 1 March 2001 and 31 March 2017: a rate based on the car’s CO2 emissions, in bands
• Registered before 1 March 2001: a rate based on engine size

The rates change every April, so always check the current figure for the car you’re looking at on gov.uk rather than trusting an old advert.

The expensive car supplement

On cars registered from 1 April 2017 that cost over £40,000 new, there’s an extra charge on top of the standard rate for five years, starting the second time the car is taxed.

It’s based on the original list price including options, not what you pay for it used. So a four-year-old car you buy for £20,000 can still be paying it. For electric cars first registered from 1 April 2025, the threshold is £50,000 instead.

Electric cars pay now too

Since 1 April 2025, electric cars pay road tax. New ones pay a low first-year rate and then the standard rate. Older electric cars that used to pay nothing now pay too, at a rate depending on when they were registered.

Paying and refunds

You can pay for 12 months, 6 months or monthly by Direct Debit. Paying monthly or for six months costs a little more than paying for the year in one go.

When you sell the car or take it off the road, the DVLA refunds any full months left automatically once they’ve been told.

How we do it at GT

Ask us and we’ll tell you the tax on any car we’re selling, so there are no surprises. When you buy from us you’ll have what you need to tax it before you drive away.

Tax a car on gov.uk →