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Car tax and fuel duty

For cars registered since 2001, Vehicle Excise Duty (also known as 'road tax' or 'car tax') is based on vehicle CO2 emissions – the amount payable scaling with the level of emissions. Fuel Excise Duty (FED) is payable on all liquid and gaseous fuels and is loosely based on the emissions impact of the fuel.

Rates in the tables below are for 2011 to 2012 as announced in the 2011 Budget. Rates for 2012 to 2013 will be announced in the next Budget in March 2012.

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Car tax – now until 31 March 2012Return to top

For cars registered since 1st March 2001, Vehicle Excise Duty (VED and often known as 'road tax' or 'car tax') is now based on 13 CO2 bands (A to M) and replaces the previous 7 CO2 band (A to G) system.

VED band A applies to all cars with CO2 emissions of up to 100 g/km. Bands B to L apply to CO2 emissions of 100 g/km up to 255 g/km, with each band covering a 10-30 g/km range. The highest band M applies to cars with emissions of over 255 g/km. The scale of charges, known as the 'standard rate', for each CO2 band for 2011-12 is shown in the table below.

A 'first year' rate applies for new cars during the first year of ownership. New cars with CO2 emissions of 130 g/km or less (VED bands A to D) have a zero-rated 'first year' rate (i.e. no car tax is charged in their first year) – the charges then revert to the 'standard rate' from the second year onwards. New cars with emissions between 131 and 165 g/km (bands E to G) pay the same 'first year' rate as the 'standard rate'. New cars with emissions over 165 g/km (bands H to M) pay a higher 'first year' rate, up to a maximum 'first year' rate of £1000.

While some alternatively fuelled cars (including hybrids and some LPG, CNG and bioethanol cars) were given a small £10 discount on both the 'standard' and 'first year' rates. this discount was abolished in April 2011, the rates aligning with the standard rates of VED. (Note that 'green cars' will still benefit as they tend to have lower CO2 emissions.) Battery electric cars are currently exempt from paying car tax.

For cars (of all types) registered before March 2001, VED is charged according to engine size – £130 up to 1550cc and £215 for larger engine sizes.


12-month Vehicle Excise Duty rates for cars registered since 1st March 2001*

VED
Band
CO2
emissions
Standard
rate
Pet/Dsl
2010-11
Standard
rate
Green car
2010-11
First year
rate
Pet/Dsl
2010-11
First year
rate
Green car
2010-11
Standard
rate
All
2011-12
First year
rate
All
2011-12
A Up to 100 g/km £0 £0 £0 £0 £0 £0
B 101-110 g/km £20 £10 £0 £0 £20 £0
C 111-120 g/km £30 £20 £0 £0 £30 £0
D 121-130 g/km £90 £80 £0 £0 £95 £0
E 131-140 g/km £110 £100 £110 £100 £115 £115
F 141-150 g/km £125 £115 £125 £115 £130 £130
G 151-165 g/km £155 £145 £155 £145 £165 £165
H 166-175 g/km £180 £170 £250 £240 £190 £265
I 176-185 g/km £200 £190 £300 £290 £210 £315
J 186-200 g/km £235 £225 £425 £415 £245 £445
K* 201-225 g/km £245 £235 £550 £540 £260 £580
L 226-255 g/km £425 £415 £750 £740 £445 £790
M Over 255 g/km £435 £425 £950 £940 £460 £1000

*Includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006.


12-month VED rates for cars (private and light goods) registered before March 2001

VED Band Engine capacity All car types
2010-2011
All car types
2011-2012
N/A Up to 1549 cc £125 £130
N/A Over 1549 cc £205 £215



Fuel duty – now until 31 March 2012Return to top

For petrol and diesel, fuel duty currently accounts for around 55% of the price at the pump (including VAT). The remainder of the price is made up of production costs and the retailer's profit margin (if any). Historically, fuel duty has been used both to raise general government revenues, and also to manage the level of car and van use for environmental reasons.

Fuel duty incentives have also been widely used by the UK government to reduce fuel costs for some greener fuels. For example, the LPG car market has been mainly driven by the low duty rates for gaseous fuels. Taking into account LPG's fuel duty and its lower energy content, an LPG car's fuel costs are currently around 25% less than for a petrol car.


UK Fuel Excise Duty rates – all figures quoted to 1 decimal place

Fuel type Fuel duty
(from Jan 2011)
Fuel duty
(from 23 Mar 2011)
Fuel duty
(from 01 Jan 2012)
Fuel duty
(from 01 Aug 2012)
Ultra-Low Sulphur Petrol 59.0 p/litre 58.0 p/litre 58.0 p/litre 61.0 p/litre
Ultra-Low Sulphur Diesel 59.0 p/litre 58.0 p/litre 58.0 p/litre 61.0 p/litre
Biodiesel used as a road fuel 59.0 p/litre 58.0 p/litre 58.0 p/litre 61.0 p/litre
Bioethanol used as a road fuel 59.0 p/litre 58.0 p/litre 58.0 p/litre 61.0 p/litre
LPG used as a road fuel 33.0 p/kg 31.6 p/kg 31.6 p/kg 37.3 p/kg
Natural gas used as a road fuel 26.2 p/kg 24.7 p/kg 24.7 p/kg 27.7 p/kg
Electricity Zero Zero Zero Zero

Source: DirectGov & Customs - Budget 2011 - updated to account for Autumn 2011 Spending Review.


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