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Road tax and fuel duty

For cars registered since 2001, Vehicle Excise Duty (VED or 'road tax') is based on tailpipe 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.

• Road tax – 1 April 2010 to 31 March 2011
• Fuel duty – 1 April 2010 to 31 March 2011

Road tax – 1 April 2010 to 31 March 2011Return to top

For cars registered since 1st March 2001, Vehicle Excise Duty ('road 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 2010-11 is shown in the table below.

From April 2010, a new '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 'road 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 £950 in 2010-11.

Other than battery electric cars, alternatively fuelled cars (including hybrids and some LPG, CNG and bioethanol cars) are given a £10 discount on both the 'standard' and 'first year' rates. However, this discount will not apply from April 2011 onwards, 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 'road tax'.

For cars (of all types) registered before March 2001, VED is charged according to engine size – £125 up to 1550cc and £205 for larger engine sizes.

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

*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

12-month VED rates for light goods vehicles registered on or after 1 March 2001

*For Euro 4 vans registered between 1 March 2003 and 31 December 2006;
 For Euro 5 vans registered between 1 January 2009 and 31 December 2010.

Fuel duty – 1 April 2010 to 31 March 2011Return 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 (from 1st April 2010)

Source: DirectGov & Customs - Budget 2010.