The New Car Tax Rules

calculator and papers

Don't get into a pickle over car taxation, we explain all!

The price of an annual car tax disc is now based on how much carbon dioxide (CO2) a car emits and what fuel it uses. The old system of car road tax, which was based only on engine size, was changed to encourage drivers out of gas-guzzling, high-emissions older cars and into newer, smaller-engined ones.

Fueling debate

The Government hopes that the CO2-based system will encourage the purchase of more fuel-efficient vehicles and those emitting less carbon dioxide (CO2 output is proportionate to the amount of fuel burned), and also to get drivers to use more environmentally-friendly fuels.

How is it worked out?

There are six CO2 grades. No new cars on sale currently meet the criteria for the lowest Band A (emitting up to 100g/km) bar special-order electric models, but a number of small city cars, and larger hybrids such as the Honda Civic IMA and Prius, qualify for Band B (101-120g/km). Inside these six bands, there are additional penalties or incentives based on the type of fuel used: alternative fuels get a part-rebate, while diesel fuels are penalised for their increased particulate emissions. Breakdown of rates :
 

Bands CO2 rating
(g/km)
Diesel
12 month
Petrol
12 month
Alternative fuel
12 month
Band A Up to 100 £75 £65 £55
Band B 101-120 £85 £75 £65
Band C 121-150 £115 £105 £95
Band D 151-165 £135 £125 £115
Band E 166-185 £160 £150 £140
Band F Over 185 £170 £165 £160

Older cars

If your car was registered before 1st March 2001, then the Vehicle Excise Duty you have to pay is based on your engine size: £110 for 12 months on vehicles up to 1549cc and £165 for those over 1549cc
 

Useful Websites

Add Your Site
  • Kestrel Taxation Services Limited
    Specialise in tax investigations including Special Compliance Office and Tax and NIC planning
  • Anne Mills Taxation Recruitment
    A bespoke recruitment firm who specialise only in tax appointments and are actively engaged in placing candidates and fulfilling project briefs within the accountancy profession and industry commerce
  • Packman Leslie & Company
    Help small businesses and their owners with all of their financial and taxation
  • Michael Reader
    Chartered accountant who, as a Fellow of the Institute of Taxation and former inspector of taxes, provides specialist taxation consultancy to businesses, individuals and fellow professional advisers
  • Kinnaird Hill
    Chartered accountants in Cambridge providing auditing, taxation, accounting and financial services
  • Manson & Partners
    Accountancy, taxation, insolvency and other financial services in Dumfries, South West Scotland
  • Add Your Website

Further Reading

  • Secured Loans Explained

    Ever wondered about the difference between secured loans and unsecured loans?
  • Unsecured Loans Explained

    Know the difference between unsecured loans and secured? Read our quick and simple guide to find out exactly what.
  • Car Hire

    All you need to know about car hire from getting the best online deals to insurance. Check out our guide now.
  • Hair Transplants Explained

    Confused or worried? This guide explains more about hair transplants and what they could do for you.
  • Your Maternity Rights Explained

    Find out more about your Statutory maternity pay rights in the simplest form With our guides we have explained in simple terms the real basics so you have some idea of what you're due!

Register for updates