What is vehicle excise duty?
Vehicle excise duty is the UK vehicle tax paid to keep most vehicles taxed for use or parking on public roads.
Vehicle excise duty is the official name for UK vehicle tax. It is often called car tax or road tax, but the amount you pay depends on the vehicle type, registration date, emissions band and, for newer higher-value cars, whether an additional rate applies.
VED is not a direct fuel bill or insurance cost. It is one of the fixed annual costs that can change the real cost of running a car, especially when comparing petrol, diesel, hybrid and electric vehicles.
Why vehicle excise duty matters
Vehicle excise duty matters because it is one of the costs many drivers forget when comparing cars. A vehicle can look cheap on fuel but still be more expensive to own once tax, insurance, depreciation and servicing are included.
For newer cars, the first-year rate is linked to CO2 emissions. From the second licence onwards, many cars registered from April 2017 pay a standard annual rate, with an additional rate for some cars that had a high list price when new.
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How vehicle excise duty works
The rules depend heavily on when the vehicle was first registered. That date matters because older cars, post-2017 cars and new cars can sit in different VED systems.
| Vehicle situation | How VED is usually worked out | Why it matters |
|---|---|---|
| New cars in their first year | First-year rate based mainly on CO2 emissions and fuel type. | High-emission new cars can have a much higher first-year charge. |
| Cars registered from 1 April 2017 | Usually a standard annual rate from the second licence onwards. | This makes year-two onwards costs easier to compare. |
| Cars with a high list price when new | May pay an additional rate for five years from the second licence. | This can make some premium cars much more expensive to tax. |
| Older cars registered before April 2017 | Often taxed under older CO2-band rules. | The same car value does not mean the same annual VED bill. |
The official way to check a specific vehicle is to use the vehicle's registration details or the GOV.UK vehicle tax-rate tables, because small details can change the rate.
Current UK vehicle tax points to know
The GOV.UK vehicle tax-rate tables for rates applying from 1 April 2026 show a standard annual rate of £200 for many petrol, diesel and alternative-fuel cars registered on or after 1 April 2017 after the first licence.
| Point | 2026/27 position | Plain-English takeaway |
|---|---|---|
| Standard annual rate | £200 for many post-April-2017 cars after the first licence. | Use this as a common year-two onwards benchmark, not a universal rule. |
| First-year zero-emission new cars | £10 for electric, zero or low-emission cars registered on or after 1 April 2025. | New EVs are no longer simply “free to tax”. |
| Electric cars registered 1 April 2017 to 31 March 2025 | Standard rate of £200. | Many existing EVs now have an annual VED cost. |
| Electric cars registered 1 March 2001 to 31 March 2017 | Standard rate of £20. | Older EVs can sit under a lower rate. |
Expensive car supplement
Some newer cars pay an additional VED charge on top of the standard rate. This is often called the expensive car supplement or luxury car tax, though the official rules depend on the car's list price when new.
- Petrol, diesel and hybrid cars: the additional rate can apply if the list price was more than £40,000 when new.
- Electric and zero-emission cars: GOV.UK guidance says the threshold is more than £50,000 for relevant vehicles registered on or after 1 April 2025.
- Timing: the additional rate applies for five years, starting from the second year of vehicle tax.
- Cost impact: it can turn what looked like a £200 annual tax bill into a much higher fixed ownership cost.
Vehicle excise duty and electric cars
Electric cars are still usually cheaper to run per mile when charged cheaply at home, but VED means they are no longer exempt from annual vehicle tax in the way many drivers remember.
When comparing an EV with a petrol or diesel car, separate the numbers. Charging cost tells you the running cost per mile. VED tells you the annual tax cost. Depreciation, insurance and finance can outweigh both.
Compare EV charging costs
Use battery size, charging price and efficiency to estimate cost per mile for an electric car.
Worked examples
These examples show why VED should be included in car comparisons, but they are not a replacement for checking the exact vehicle.
Annual ownership cost = fuel or charging + insurance + maintenance + VED + depreciation + finance costsA car with lower fuel cost can still be more expensive overall if it has higher depreciation, insurance or an additional VED rate. That is why the best comparison looks beyond fuel alone.
Common mistakes
Source notes
Vehicle tax changes regularly, so this glossary page uses official GOV.UK guidance rather than old “road tax band” assumptions.
- GOV.UK vehicle tax rates V149 — current vehicle tax-rate tables from 1 April 2026.
- GOV.UK vehicle tax for electric, zero and low-emission vehicles — EV and low-emission vehicle tax rules.
- GOV.UK vehicle tax service — official route for taxing or checking a vehicle.
FAQs
Is vehicle excise duty the same as road tax?
Vehicle excise duty is the official name. Many people call it road tax or car tax, but VED is the formal term used in UK vehicle tax rules.
Do electric cars pay vehicle excise duty?
Yes. From April 2025, electric, zero and low-emission vehicles became subject to vehicle tax. The amount depends on the vehicle and registration date.
Is vehicle excise duty based on how many miles I drive?
Under current VED rules, car tax is generally not calculated from your annual mileage. It is mainly linked to vehicle type, registration date, emissions and list-price rules.
Does vehicle excise duty affect fuel cost per mile?
Not directly. Fuel cost per mile measures petrol, diesel or electricity use. VED is a separate annual ownership cost, so it affects total yearly cost rather than the fuel used on one journey.