What is vehicle excise duty and what are the VED tax rates?

Paying VED or road tax can be a pain, but it’s better than getting a fine from the DVLA for not following the rules.

If you’re not sure what you’re meant to be paying, here’s the lowdown on vehicle excise duty and how to find out what tax band your vehicle is in.

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What is vehicle excise duty?

Vehicle Excise Duty, or VED, is also referred to as vehicle tax, car tax or road tax.

Most vehicles used – or parked – on public roads in the UK will be subject to VED.

It’s collected and enforced by the DVLA, and if you aren’t using your vehicle, you must make a SORN, or Statutory Off Road Notification, to take it off the road.

You can pay VED in one 12-month amount, split it into two six-month payments or opt for monthly instalments.

Do you pay VED road tax for an electric car?

Currently, no. But as announced by Jeremy Hunt in his Autumn statement, electric cars will start paying VED road tax from April 2025.

Hunt said: “Because the OBR (Office for Budget Responsibility) forecast half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I’ve decided that from then, electric vehicles will no longer be exempt from vehicle excise duty.”

The exact amounts are yet to be announced, but Hunt also said company car tax for electric cars will increase by 1% for three years from 2025.

What are the VED tax rates now and what band is my vehicle in?

There are two payment schedules in effect, and the one your vehicle belongs to depends on whether your car was first registered before or after 1 April 2017.

For cars registered before 1 April 2017, the excise duty depends on two criteria:

• If the car was registered before 1 March 2001, the excise duty is based on engine size – £180 for vehicles with a capacity of less than 1549cc, and £295 for vehicles with bigger engines
• If the car was registered after 1 March 2001, charges are based on theoretical CO2 emission rates per kilometre. Check out the GOV.UK site for more details.

Cars registered after 1 April 2017 operate under a different schedule, where hybrid vehicles are no longer rated at £0 and cars with a retail price of £40,000 and over will pay a supplement for the first five years of the standard rate. The RAC website has further information.

What is Statutory Off Road Notification or SORN?

A Statutory Off Road Notification is a declaration made by the registered owner of a vehicle that they are removing their car from the public highway.

By doing this, the person will no longer need to pay road tax, as the notification tells the DVLA that a vehicle is registered but not currently being used.

Those who have their insurance and road tax expire and don’t want to renew them may find it makes more sense to declare a SORN instead.