Quick answer
The cost to run a car in the UK is not just petrol or diesel. A realistic yearly total includes fuel or charging, insurance, MOT, servicing, tyres, repairs, road tax, parking, finance interest and the loss in value as the car gets older.
If you already own the car outright, fuel, insurance, servicing, MOT and tax are the obvious bills. If you are buying, financing or leasing, depreciation and finance cost can be the biggest part of the real annual cost.
For a simple running-cost estimate, start with your yearly mileage and cost per mile, then add the fixed annual costs you cannot avoid.
Start with your fuel or charging cost
Use your real mileage, MPG, local fuel price or electricity tariff before adding insurance, tax and servicing.
Typical annual car running costs to include
The table below shows the main cost categories most UK drivers should think about. Your actual numbers can be much higher or lower depending on the car, location, mileage, age, driving record and whether you own or finance it.
| Cost area | What to include | How to estimate it |
|---|---|---|
| Fuel or charging | Petrol, diesel or electricity | Annual miles × energy cost per mile |
| Insurance | Annual premium, optional extras, excess risk | Use your renewal or live quote, not a national average |
| Vehicle tax | VED / road tax | Check the car's CO2 band, registration date and list price |
| MOT | Annual test once the car is old enough | Budget up to the legal maximum, plus repairs if needed |
| Servicing and repairs | Routine service, fluids, brakes, faults | Use last year's invoices or manufacturer service schedule |
| Tyres | Replacement tyres, punctures, alignment | Spread expected tyre cost over the miles they last |
| Depreciation | Loss in car value over time | Purchase price minus expected future value |
| Finance or lease | Interest, monthly payments, deposit, balloon payment | Use the full contract cost, not just the monthly payment |
| Parking, tolls and charges | Work parking, permits, congestion charges, toll roads | Daily cost × number of driving days |
Fuel and electricity costs
For many drivers, fuel is the easiest cost to notice because it comes out of your bank account every week. Recent UK average prices show unleaded petrol at 155.54p per litre and diesel at 176.71p per litre for the week ending 15 June 2026. Electric running costs depend heavily on whether you charge at home or use public chargers.
For petrol and diesel, multiply your annual miles by your fuel cost per mile. For electric cars, divide your annual miles by miles per kWh, then multiply by your electricity price per kWh.
Working out a commute?
Daily travel to work can look small until it is multiplied across 40 to 48 working weeks.
Insurance, vehicle tax and MOT
Insurance is one of the hardest costs to estimate with a national average because it depends on the driver, address, vehicle, claims history, job title, no-claims discount and cover level. For planning, use your actual renewal or a fresh quote.
Vehicle Excise Duty depends on the car and its registration details. Electric, zero and low-emission cars registered on or after 1 April 2025 pay £10 in the first year and the standard £200 rate after that. Electric cars registered between 1 April 2017 and 31 March 2025 also pay the £200 standard rate.
For MOT costs, GOV.UK says the maximum MOT test fee for a car is £54.85 and there is no VAT on the fee. That is only the test fee; any repairs needed to pass are separate.
Servicing, repairs and tyres
Servicing and repairs are where many car budgets go wrong. A car can feel cheap while it only needs fuel and insurance, then suddenly become expensive when brakes, tyres, suspension, battery or diagnostic work arrives at the same time.
A practical way to budget is to create a monthly car maintenance pot. For newer cars under warranty, the figure may be modest. For older cars, a larger pot is safer because repairs are less predictable.
Tyres are a running cost, not a surprise. If four tyres cost £400 and last 20,000 miles, that alone is 2p per mile before servicing, repairs or fuel.
Depreciation and finance costs
The biggest hidden cost of a car is often the money it loses while you own it. A car bought for £25,000 and sold later for £15,000 has cost £10,000 in value before you count fuel, tax, insurance or repairs.
Finance can hide this because the monthly payment feels like the cost. The better calculation is deposit + monthly payments + fees + final payment, minus what the car is worth or what you get back at the end.
Estimate the loss in value
Use purchase price, current value and forecast years to estimate the value your car may lose.
Worked examples
These examples are deliberately simplified. They show how different driving patterns change the answer, not what every driver will pay.
| Example driver | Energy cost | Other annual costs | Estimated annual total |
|---|---|---|---|
| Low-mileage petrol driver, 5,000 miles at 40 MPG | About £884 | Insurance, MOT, tax, servicing and repairs | Often £2,000+ before depreciation |
| Commuter petrol driver, 10,000 miles at 40 MPG | About £1,768 | Parking, tyres and servicing become more important | Often £3,000+ before finance or depreciation |
| Home-charged EV driver, 10,000 miles at 3.5 miles/kWh | About £746 at 26.11p/kWh | Insurance, tyres, tax and depreciation still apply | Energy is lower, but total ownership still depends on car price |
The trap is comparing only fuel against electricity. To decide which car is cheaper overall, compare the whole ownership cost across the same time period.
How to turn annual cost into cost per mile
Once you have a yearly total, divide it by annual mileage. This gives a practical pence per mile figure you can compare across cars.
real cost per mile = total annual car cost ÷ annual milesFor example, if your car costs £4,000 per year all-in and you drive 8,000 miles, your real cost is 50p per mile. That is very different from saying the car only costs 15p per mile in fuel.
Ways to reduce your car running costs
The best savings depend on which cost is biggest for you. Cutting fuel use helps high-mileage drivers. Shopping around for insurance may matter more for low-mileage drivers. Choosing a car that depreciates slowly can beat small fuel savings.
- Use the MPG calculator to check real-world efficiency instead of brochure claims.
- Compare home and public charging using the EV charging cost calculator.
- Check whether a work journey is claimable with the mileage reimbursement calculator.
- Budget for tyres and servicing monthly instead of waiting for one large bill.
- Compare full finance cost with the car finance calculator, where relevant.
FAQs
What is the biggest cost of running a car?
For many owners, depreciation or finance is bigger than fuel. For older cars owned outright, insurance, fuel, servicing and repairs may dominate.
How much does petrol cost per mile?
At 155.54p per litre, a 40 MPG petrol car costs about 17.7p per mile in fuel only. This excludes insurance, tax, MOT, servicing and depreciation.
Are electric cars cheaper to run?
Electric cars are often cheaper for energy when charged at home, but total cost depends on insurance, purchase price, finance, depreciation and charging access.
Should I include depreciation in car running costs?
Yes, if you want the real cost of ownership. Depreciation is not a monthly bill, but it is still money lost when the car is worth less than you paid.
Is road tax the same for electric cars?
No longer free in many cases. GOV.UK says electric, zero and low-emission cars registered on or after 1 April 2025 pay £10 in the first year and £200 after that.
Figures and sources to check
Fuel prices should be checked regularly because pump prices change. The example fuel figures on this page use PetrolPrices weekly UK average data for the week ending 15 June 2026.
Electricity assumptions should also be checked because tariffs vary by region and supplier. Ofgem's price cap data for 1 July to 30 September 2026 is based on average Direct Debit unit rates and standing charges for England, Scotland and Wales.
Vehicle tax and MOT figures should be checked on GOV.UK before publishing updates because vehicle tax rules and MOT fee limits can change by registration date, vehicle type and emissions.