Vehicle Excise Duty (car tax, road tax, "the tax", whatever you grew up calling it) should be simple. It isn't, because the rules have been rewritten twice in twenty years and none of the old systems were switched off. Three different regimes are running side by side right now, and which one applies to a car depends entirely on when it was first registered.
The three systems, quickly
Registered before March 2001: tax is based on engine size, full stop. Under 1549cc pays one rate, over pays another (£230 and £375 a year for the 2026/27 tax year). A thirsty old V8 and a frugal little diesel from 2000 can pay the same. Nobody said it was clever.
March 2001 to March 2017: tax follows the car's official CO2 figure, in thirteen bands from A to M. This is the era of the "free tax" diesel: plenty of efficient cars from these years sit in bands A to C and cost next to nothing (even band A pays £20 a year now), which still props up their used values today. At the other end, band M is £790 a year. For these cars the CO2 figure on the V5C is genuinely worth reading before you buy.
April 2017 onwards: CO2 only decides the first year's tax, which is baked into the on-the-road price and mostly invisible to you. From year two, almost everything pays the same flat standard rate (£200 a year for 2026/27), whether it's a 1.0 city car or a supercharged estate. The green-car discount at the pump, not the tax disc, is where efficiency pays off in this era.
The £40,000 trap
Here's the one that stings people on nearly-new cars: the expensive car supplement. If a car's list price was over £40,000 when new (list price, including options, not what anyone actually paid), it carries an extra charge on top of the standard rate in years two to six. That's £440 a year for 2026/27, so a three-year-old car caught by it costs £640 a year to tax.
The trap has two jaws. First, discounts don't help: a car listed at £42,000 and sold new for £36,500 still pays, forever, because it's the sticker that counts. Second, options count: a £38,500 car whose first owner ticked £2,000 of boxes crosses the line. You cannot see optioned-up list price on the advert, and plenty of sellers genuinely don't know. If you're shopping at three to six years old in the £30–45k-when-new bracket, check before you commit; it's a £2,200 difference over your ownership.
Electric cars pay now too
The free ride ended in April 2025. EVs now pay a token first-year rate and then the same standard rate as everything else. More painfully, EVs over £50,000 list pay the expensive car supplement, a higher threshold than the £40,000 that applies to everything else. If you're buying a used EV, the registration date suddenly matters: one registered before April 2025 escapes the supplement entirely, whatever it cost new.
Tax never comes with the car
Since 2014 this has been absolute: tax does not transfer with the vehicle. The moment DVLA learns the car has changed hands, the seller's remaining full months are refunded to them automatically, and the car is untaxed. "It's taxed until March, love" means nothing: it stops being taxed the day you buy it.
The practical drill: before you drive your new car home, tax it. It takes five minutes online using the reference number on the green new keeper slip (V5C/2), and you can do it on your phone on the seller's driveway. Drive off without doing it and you're on camera-enforced borrowed time; DVLA's ANPR enforcement is automated and the fines arrive by post without a human ever being involved.
SORN, and the cars that pretend to be off the road
A car that's kept off the public road can be declared SORN (a Statutory Off Road Notification) and pay nothing. That's the legitimate use. The thing to watch as a buyer is a car whose history shows long SORN periods with mileage still accumulating between MOTs, which means it was being driven while declared off-road, or a car that's been SORNed for years and is now being sold as a runner. Neither is automatically a scandal, but both are questions: where was it, why, and what was it doing?
Checking the tax position before you buy
A car's current tax status, tax band and when its tax runs out are all on its DVLA record, and a vehicle history check shows them alongside the CO2 figure that drives the cost, so you know before viewing whether you're looking at a £20-a-year band B hatchback or a supplement-carrying £640-a-year money pit. You can also ballpark any car yourself with our free car tax calculator. It sits in the same report as the MOT history and mileage record, which is convenient, because you were checking those anyway.
One last thing worth knowing: paying monthly by Direct Debit costs about 5% more over the year than paying annually, and a six-month payment carries the same surcharge. Small print, but it's the difference between the advert's "cheap tax" claim and what actually leaves your account.