Vehicle Excise Duty (VED) – or road tax, as most of us call it – falls into one of 13 ‘bands’, depending on a car's CO2 emissions. The more CO2 a car puts out, the higher the tax it will attract.
Cheapest cars to tax
Cars with emissions under 120g/km CO2 are the cheapest to tax – in fact, cars in Band A (up to 100g/km) don't have to pay any road tax at all.
While most Band A cars are small hatchbacks, the band also includes several popular small family cars and some bigger models: certain diesel versions of the Volkswagen Golf, Ford Focus and Audi A3 Sportback fall into Band A, as does Toyota's seven-seat Prius+ hybrid and the hybrid diesel model of the Peugeot 3008 SUV.
Among the cars in Band B (£20 a year to tax) are the Renault Scenic 1.5 dCI 110 S&S and its seven-seat brother, the Grand Scenic, plus certain diesel models of the BMW 3 Series saloon, Volvo V60 estate, Ford B-Max mini-SUV and the Skoda Octavia estate.
Band C cars (£30 road tax) include certain diesel versions of the Audi A4 Avant, BMW 3 Series Touring, Mercedes E-Class and Volkswagen Passat estate cars, the e-HDi 110 Airdream EGS6 Edition of the Citroen C4 Picasso MPV and its seven-seat 'Grand' sibling, the Nissan Qashqai in 1.6 dCi DPF Stop Start form and Mazda's CX-5 SUV in its 2.2 Skyactiv-D (150 PS) 2WD guise.
Not only are cars in Bands A-C particularly cheap to tax; their low CO2 emissions come hand-in-hand with some of the best fuel economy figures, too.
With Band D (121g-130g/km CO2) road tax jumps to £105 per annum, and there is an increase of around £20 with each subsequent band (with the exception of band L, which jumps a whopping £1905 from band K).
First-year tax rates
In their first year, new cars are subject to a special rate of road tax (sometimes called 'showroom tax') that is heavily weighted against cars with high CO2 emissions. Cars with less than 131g/km CO2 (bands A-D) are rewarded with road tax at all in the first year, in fact; cars in bands E-G pay their standard rate, but from band H a surcharge is added – from £85 for band H cars to an extra £585 for cars in band M (CO2 255g/km). After this, cars are liable to their standard rate of annual road tax.
Road tax rates (first year/standard rates)
Band A up to 100g/km CO2 – £0/£0
Band B 101-110g/km – £0/£20
Band C 111-120g/km – £0/£30
Band D 121-130g/km – £0/£105
Band E 131-140g/km – £125/£125
Band F 141-150g/km – £140/£140
Band G 151-165g/km – £175/£175
Band H 166-175g/km – £285/£200
Band I 176-185g/km – £335/£220
Band J 186-200g/km – £475/£260
Band K* 201-225g/km – £620/£280
Band L 226-255g/km – £840/£475
Band M Over 255g/km – £1075/£490
* Band K includes cars that have a CO2 figure of more than 225/g/km but which were registered before March 23, 2006.
Tax break for alternative-fuel cars
Cars which run on certain 'alternative' fuels (fuels that are deemed cleaner than pure petrol or pure diesel) get a small tax break – they pay £10 less than standard cars do with the same CO2 emissions. These alternative fuels are:
• Road fuel gas (including Liquefied Petroleum Gas, or LPG)
• A combination of petrol and road fuel gas
• A combination of electricity and either petrol or diesel
• A mixture of bioethanol and unleaded petrol, where the proportion of bioethanol is at least 85%
Cars registered before 1 March 2001
These older - but not yet classic (see below) – cars have their own rates of road tax, depending on their engine size in ccs. The 12-month rates are:
Cars not over 1549cc £140
Cars over 1549cc £225
The very old and the very new
Cars made before 1 January 1973 (often referred to as 'classic cars') are exempt from any road tax, as are purely electric cars (in line with their 0g/km CO2 emissions). Next tax year the classic car exemption will extend to cover cars made from 1 January 1974.