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Car tax explained

By Adrian Porter

Updated to include April 2019 new car tax rates, we show how much you'll need to pay, and reveal which cars are exempt from car tax.

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Car tax rates for cars, vans and motorcycles will increase in line with RPI (Retail Price Index) from 1 April 2019. Heavy Goods Vehicle car tax rates will remain frozen for 2019-20. 

Here we lay out everything you need to know about the different car tax rates and rules, and what you'll be paying.

Need a new car? Head straight to our car reviews.

Important: first registration date 

What rate of car tax you'll pay is based on the date the car was first registered - this is not always the same date you bought the car, if you bought it used.

First registration dateThe date the vehicle was registered to its first keeper in the UK. The first registration date does not alter with subsequent owners. For instance: a car bought brand new and registered on 1 July 2016, and then sold to someone else on 1 August 2017, will always have a first registration date of 1 July 2016.

Current car tax rates in a nutshell 

These rules apply to all cars that were first registered after 1 April 2017:

  • The 'first year rate' is based on CO2 emissions.
  • First year rate for diesel cars from 1 April 2018 - owners are charged a higher rate unless they meet RDE2 emission standards
  • The 'standard rate' kicks in after the first year: £145 for petrol and diesel cars, £135 for hybrids and alternative fuel cars.
  • £40,000 rule - if your car cost over £40,000, you have to pay an extra £320, per year for five years, on top of the standard rate.
  • Only zero-emission cars (like electric vehicles) are exempt from car tax - but are still subject to the £40,000 rule.
  • New rules are not being backdated to older cars, they will continue along the previous tax system.

Below we explain the post-2017 rules in more detail, or you can skip straight to the table of car tax rates.

Car tax rates for cars first registered after 1 April 2017 

Low-emission cars are no longer exempt from car tax and cars that cost over £40,000 will have an additional £320 per year charge applied to them over five years.

There are two main rates for cars that were registered as new after 1 April 2017:

  1. The first year rate is based on the amount of CO2 (carbon dioxide) your car produces
  2. After that, a standard rate applies. Petrol and diesel car owners will pay £145.

Car tax rates for diesel cars

Anybody who buys a new diesel car that doesn’t comply with RDE Act 2 (RDE2) emission testing will pay a higher amount of car tax in the first year of ownership.

New RDE tests came into force in September 2017, but not all new cars had to comply with these new testing procedures until 1 September 2019. Find out more about official tests and how our tests compare by going to how we test mpg and emissions.

The rules are not being back dated; it only affects those buying a new diesel car that was first registered on or after 1 April 2018.

Hybrid owners pay (slightly) less car tax

The rates are slightly different for owners of 'alternative fuel' cars. These are vehicles that do not run purely on diesel or petrol and include:
  • Hybrids
  • Plug-in hybrids
  • Liquefied petroleum gas (LPG) cars
  • Compressed natural gas (CNG) cars
  • Biofuel cars (bioethanol or biodiesel)

Drivers of alternative fuel cars pay £10 less than petrol and diesel owners in the first year. They then pay £135 every year after.

Wondering if you should buy an electric car? The worst we've seen are impractical and unreliable, but the best have a decent range and are worth buying. Find out which electric cars we recommend by checking out our roundup of the best electric cars.

Car tax rate table 

This table shows the car tax rates as of April 2019. These rates apply to cars first registered on or after 1 April 2017:

Car tax rates from April 2019
Car tax rates for petrol and diesel cars
CO2 emissions First-year rate First-year rate for diesel cars* Standard rate - from second year onwards
0 £0 £0 £145
1-50 g/km £10 £25 £145
51-75 g/km £25 £110 £145
76-90 g/km £110 £130 £145
91-100 g/km £130 £150 £145
101-110 g/km £150 £170 £145
111-130 g/km £170 £210 £145
131-150 g/km £210 £530 £145
151-170 g/km £530 £855 £145
171-190 g/km £855 £1,280 £145
191-225 g/km £1,280 £1,815 £145
226-255 g/km £1,815 £2,135 £145
Over 255 g/km £2,135 £2,135 £145
*For diesel cars that do not yet comply with RDE Act 2 (RDE2) emission testing.
Alternative fuel car tax rates from April 2019
Car tax rates for alternative fuel cars (hybrids, LPG, CNG, biofuel)
CO2 emissions First-year rate Standard rate - from second year onwards
0 £0 £135
1-50 g/km £0 £135
51-75 g/km £15 £135
76-90 g/km £100 £135
91-100 g/km £120 £135
101-110 g/km £140 £135
111-130 g/km £160 £135
131-150 g/km £200 £135
151-170 g/km £520 £135
171-190 g/km £845 £135
191-225 g/km £1,270 £135
226-255 g/km £1,805 £135
Over 255 g/km £2,125 £135

£40,000 rule for car tax 

After the first year, owners of cars that cost over £40,000 will also have to pay an additional annual supplement of £320 for five years. 

This £40,000 rule also applies to zero-emission cars that cost over £40,000. So if you bought a brand new Tesla Model X (an electric car that costs from £75,000), for instance, you will pay £320 per year during the second to sixth year of ownership. That’s £1,600 in total.

Here's a table showing the rates for cars that cost over £40,000:

£40,000 rule explained
Cars over £40,000: what you'll pay during years 2-6
Fuel type Standard annual rate Additional rate Total annual payment
Petrol/diesel £145 £320 £465
Alternative £135 £320 £455
Electric 0 £320 £320

Previous car tax rates: petrol and diesel cars 

Any car first registered as new after 1 March 2001, but before 1 April 2017, will continue to be taxed at their respective rates. These are based on official CO2 emissions - with one caveat:

It was announced in the 2017 Spring budget that these rates will increase in line with the RPI (Retail Price Index) - from April 2017.

The amount of CO2 your car produces puts it into one of the following bands. These bands have a letter assigned to them, from A to M - cars in band A emit the least amount of CO2, and are currently exempt from paying any car tax throughout the life of the car.

The rates below show the price if you choose to make a single payment for the year, and have updated to show the latest rates (apply from 1 April 2019)

You can choose to set up a direct debit to pay monthly, or pay a single payment every six months. But if you choose either of these options, you will end up paying more.

Pre-April 2017 car tax rates explained
Current car tax rates
Car tax band CO2 emissions First year rate Annual rate after first year
A Up to 100 g/km £0 £0
B 101-110 g/km £0 £20
C. 111-120 g/km £0 £30
D 121-130 g/km £0 £125
E 131-140 g/km £130 £145
F 141-150 g/km £145 £160
G 151-165 g/km £185 £200
H 166-175 g/km £300 £235
I 176-185 g/km £355 £260
J 186-200 g/km £500 £300
K 201-225 g/km £650 £325
L 226-255 g/km £885 £555
M. Over 255 g/km £1,120 £570

*Band K includes cars that have a CO2 figure over 225g/km but were registered before 23 March 2006.

These car tax rates apply to cars registered after 1 March 2001. Cars registered before this date are charged based on their engine size: those with engines smaller than 1549cc will pay £160 a year and others will pay £265 a year.

A rolling 40-year car tax exemption for classic vehicles applies from 1 April 2015. It means any vehicle built 40 or more years ago will be exempt from car tax on an automatic rolling basis on 1 April each year.

Not sure whether your next car should be diesel or petrol? Use our calculator to find out which will cost you less - petrol or diesel car.

Previous tax rates: alternative-fuel cars

Alternative-fuel cars are those that do not run purely on diesel or petrol. They can include:

  • Hybrids
  • Plug-in hybrids
  • Liquefied petroleum gas (LPG) cars
  • Compressed natural gas (CNG) cars
  • Biofuel cars (bioethanol or biodiesel)

The car tax rates for alternative-fuel cars simply cost £10 less than for regular petrol or diesel combustion cars.

Will I be better or worse off under the newer system? 

To show how the post-April 2017 car tax system compares to the previous car tax system, we've compared rates on a selection of cars with CO2 levels ranging from low to high. All cars are for example purposes only and some have greener engines available. All models listed are under £40,000:

Table notes:

Correct as of 1 April 2019
*Alternative fuel rates apply
**Higher first year rate for diesel cars applies

Updated to use the latest rates, you can see that the under the current system, you would pay £1,215 of car tax over ten years on the the Toyota Prius Plug-in hybrid. The cleanest car in the table, it has a remarkably low CO2 figure of just 28g/km. 

However, under the previous system, it would have been exempt from car tax thanks to its low emissions.

The Ford Ranger is the highest CO2 figure,emitting 231g/km of CO2. Under the current system, its owners will pay £3,440 over ten years, noticeably more than the Prius Plug-in. 

However, under the older system, owners would pay £5,880 over the same period, meaning that anyone buying a high polluting car today would save £2,440 compared to the older system.

£2,440The new rules will mean you will pay £2,425 less on environmentally unfriendly cars like the Ford Ranger, yet pay £1,235-£1,435 more on green cars like the Toyota Prius Plug-in and the VW Up, over a 10-year period.

No more tax discs 

Since 1 October 2014, you are no longer required to display a tax disc in the windscreen of your car.

This did not, sadly, mean the end of annual car tax but it does have implications for buying and selling cars.

  • If you buy a used car: any remaining car tax can no longer be transferred so you need to tax the car before you can use it.  
  • If you sell a car: you will get an automatic refund for any remaining car tax – provided you have notified the DVLA of the sale.

However, you will only be refunded for any full calendar months remaining. That means if you sell your car one week into the month, both you and the new owner will effectively have to tax it for the remainder of that month.

Company cars and car tax 

The company car tax rules were changed back in 2002, with tax rates based on a car's CO2 emissions. This means drivers of 'greener' cars pay less 'benefit in kind' (BIK) tax.

Essentially, a car’s CO2 emissions place it in a band, which gives the percentage BIK tax a driver will pay.

Unlike privately owned cars, new vehicles will not be subject to the same flat rate after April 2017. The BIK rates, which are based on CO2 emissions, have been set until 2019-20.

The exception is diesel cars. From 6 April 2018, those buying a new diesel car that do not meet Real Driving Emissions Step 2 standards will see a rise in the existing Company Car Tax diesel supplement - from 3% to 4%.

Now you're up-to-date with the new car tax rules, we'll help you to choose your next new car by using our independent tests and expert research to compare car reviews.

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