What is VED? And everything else you should know about UK road tax

Vehicle excise duty (VED) – better known as road tax – is one way we drivers have to pony up the pennies to, er, drive. It's applied to all cars new or old, but since the rules have changed over the years, not all road tax is billed equally.

And wouldn't you know it, the rules have changed again for 2025. So here's a handy guide to understanding everything about UK road tax... let the grumbling about potholes begin!

What is VED?

Simply, it’s the price you pay for the privilege of using your car on the road. Donkeys years ago, it was set up as a pot of money ringfenced for creating and maintaining road infrastructure. Longer story short, some chap called Winston Churchill removed the ringfence so the pot got swallowed up into the general ‘running-the-country’ pot.

That goes some way to explaining the giant craters in my area. How does it work?

They don't call them pot holes for nothing. Road tax is a mandatory requirement for all cars on the road, unless they qualify for an exemption. The registered keeper renews it when a postal reminder is received. If you don’t have the number from the reminder, you can plug the document number on the V5C for the car directly into the gov.uk website page (link below) and go through the payment journey.

How much is road tax in the UK then?

Ah, great question. Since the new tax year started (2025/26), the standard flat rate is £195, up from £190 last year.

But like everything in life, it’s not that straightforward. For starters, this only kicks in after the first year. In that year, you pay an amount based on your vehicle's emissions. Then from the second year, the standard rate kicks in.

And if HMRC didn't make that structure complicated enough, expensive cars pay an added surcharge and some other cars are exempt, like certain classics.

And EVs have to pay now too, right?

Quite right. From this year, EVs will now pay the standard rate just like all other post-2017 cars, after several years of being exempt to incentivise take-up.

What’s the significance of 2017?

Between 2001 and 2017, the CO2 emissions of the vehicle dictated how much tax a driver paid. As listed here, anything with less than 100g/km was zero pounds, and if emissions were low, so was road tax – we’re talking twenty or thirty quid with some cars.

Many of those motors from around 2015 comply with ULEZ regs too, so it’s always worth watching the classifieds. However, from 2025, they'll also be liable to pay a different rate of road tax, starting from £20.

What’s the surcharge on expensive cars about?

If the car, after options, costs over £40,000, you’ll have to pay an annual surcharge starting from £425 for 2025 (up from £410 for 2024). Note, even if the showroom cuts you a deal that puts the car under £40k on paper, it’ll still be considered over £40k for tax purposes.

The surcharge only kicks in at the second year of ownership but you need to pay it for a further five years on top of the standard rate. Ouch. But since the £40,000 threshold hasn't changed since 2017, and we've had that small fiscal matter of inflation in the intervening years, some folk reckon it should rise to £60,000. That's an argument for another day, mind.

What about VED exemptions?

Classic cars older than 40 years don’t require any VED payment. But – because with anything tax-related, there's always a 'but' – it’s not automatic.

As classics were born in a pre-digital world, you need to register the vehicle for automatic exemption and even then, you’ll still get reminder emails demanding £0.00 unless you complete an online form. If you don’t, an £80 fine could be winging its way directly to you.

Any good news?

Erm, not really. Once upon a time, hybrids got a discount, but that is no more from 2025. Sorry.

How do I check my road tax?

You can go to this government website page and follow the payment journey. Or call the DVLA on 0300 123 4321 – good luck!