London Congestion Charge - Now and from Oct 2008Return to top

London Congestion Charge discounts are currently available for the greenest cars. If you have to drive into the Congestion Charge zone on a regular basis, the annual congestion charge can amount to over £2000 per year (£8 per day). Due to their low levels of regulated emissions, the greenest cars are eligible for 100% discounts under the current system. To be eligible the car must be listed on the current PowerShift Register. At present, these include the cleanest LPG and natural gas cars, and all hybrid-electric and battery-electric vehicles. Visit TfLs's website for details of current London Congestion Charge discounts.

However, from 27th October 2008, a new CO2-based London Congestion Charge will be introduced. Under the new emissions-based scheme, cars with CO2 emissions of 120 g/km or less (VED bands A and B), which are also Euro IV vehicles and registered since 01 March 2001, will receive a 100% Congestion Charge discount.

From 27th October, cars with CO2 emissions greater than 225 g/km (equivalent to the new Vehicle Excise Duty band G), as well as those registered before 01 March 2001 with engines larger than 3,000 cc, will face a London Congestion Charge of £25 per day. The majority of cars, VED bands C, D, E and those in F with emissions up to 225 g/km, as well as those registered before 01 March 2001 with engines up to and including 3,000 cc, will continue to pay exactly the same daily charge as at present (£8).

Under the new scheme, vehicles already registered for the Alternative Fuel Discount will continue to receive the discount until January 2010, unless the vehicle changed ownership. The current discounts and exemptions for Blue Badge holders and Taxis & Licensed Private Hire Vehicles will be unaffected by these proposals. Under the Congestion Charging NHS reimbursement scheme, eligible claimants are reimbursed the £8 daily charge. This scheme will continue for the £8 standard daily charge; however those drivers of band G vehicles will only be eligible for £8 reimbursement rather than £25.

For more information, visit Transport for London.

Vehicle Excise Duty ('road tax') - 13 March 2008 to 2009Return to top

While not a major cost for cars, vehicle excise duty ('road tax') for cars registered since 1st March 2001 is dependent upon the fuel type and the level of CO2 emissions. Through the use of separate rates for petrol, diesel and green fuels, the rates also reflect levels of regulated emissions. The following table shows the current Vehicle Excise Duty rates that apply to light-duty vehicles.

12-month VED rates for cars registered since 1st March 2001*

VED Band	CO2 emissions	Diesel car	Petrol car	Green car
A	Up to 100 g/km	£0	£0	£0
B	101-120 g/km	£35	£35	£15
C	121-150 g/km	£120	£120	£100
D	151-165 g/km	£145	£145	£125
E	166-185 g/km	£170	£170	£150
F	Over 185 g/km	£210	£210	£195
G**	Over 225 g/km	£400	£400	£385

*For cars registered before March 2001, the VED rates are charged according to engine size - £120 up to 1550cc and £185 for larger engine sizes. **For cars registered on or after 23rd March 2006.
Figures updated to reflect March 2008 Budget.

To check the road tax band for particular models registered since 1st March 2001, use the VCA online calculator. For older cars, go to the DirectGov website.

Vehicle Excise Duty ('road tax') - April 2009 to 2011Return to top

From 1st April next year (2009), VED will be totally restructured with 13 new bands (A to M) replacing the current 7-band (A to G) system. VED will still be based on CO2, and band A will continue to apply to all cars with CO2-emissions of up to 100 gCO2/km, but most bands will be narrower (bands B to I will only be 10 gCO2/km wide). The highest band M will apply to cars with emissions of over 255 gCO2/km (currently the highest band applies to cars with over 225 gCO2/km).

The Government’s intention is that the link between road tax and CO2 emissions will be strengthened, so making a small change in car emissions have a greater financial impact. The scale of charges for 2009-10 has been adjusted to reduce the ‘standard rate’ of VED for all new and existing cars with emissions up to 150 gCO2/km, and to increase the standard rate for all cars that emit over 150 gCO2/km with the most polluting cars paying £440 per year, £40 up on 2008-09 rates..

In addition, from 1st April 2010, a new ‘first-year rate’ will be introduced for all new cars during the first year of ownership and will be dependent on the VED band. All new cars with emissions of 130 gCO2/km or less will have a zero-rated first-year rate (i.e. no ‘road tax’ will be charged in their first year) and then pay the standard rate thereafter; all new cars with emissions between 131 and 160 gCO2/km will pay the same first-year rate as the standard rate in 2010-11; and all new cars with emissions over 160 gCO2/km will pay a higher first-year rate, up to a maximum first-year rate for the most polluting cars of £950 in 2010-11.

The discount for alternatively fuelled cars will continue to be in the range £15 or £20 in 2009-10, but will be reduced to £10 in 2010-11, and will disappear in 2011, the rates aligning with the standard rates of VED.

12-month VED rates for cars registered since 1st March 2001*

VED Band	CO2 emissions	Standard rate 2009-10	First-year rate 2010-11	Standard rate 2010-11
A	Up to 100 g/km	£0	£0	£0
B	101-110 g/km	£20	£0	£20
C	111-120 g/km	£30	£0	£35
D	121-130 g/km	£90	£0	£95
E	131-140 g/km	£110	£115	£115
F	141-150 g/km	£120	£125	£125
G	151-160 g/km	£150	£155	£155
H	161-170 g/km	£175	£250	£180
I	171-180 g/km	£205	£300	£210
J	181-200 g/km	£260	£425	£270
K	201-225 g/km	£300	£550	£310
L	226-255 g/km	£415	£750	£430
M	Over 255 g/km	£440	£950	£455

*For cars registered before March 2001, the VED rates are charged according to engine size - £120 up to 1550cc and £185 for larger engine sizes. Figures announced in March 2008 Budget.

Fuel duty Return to top

Fuel excise duty (fuel tax) incentives have been widely used by the UK government to reduce costs for green vehicle fuels. For example, the LPG vehicle market has been mainly driven by the low duty rates for gaseous fuels. With a fuel duty of around 6.6p/litre, the fuel duty benefit is around 42p/litre when compared to petrol. Taking into account LPG's lower energy content and higher production costs, an LPG car's fuel costs are around 30% less than for a petrol car.

UK fuel excise duty and VAT rates (from 1st October 2007)

Fuel type	Fuel duty	VAT Rate
Ultra-Low Sulphur Petrol	50.4 p/litre	17.5%
Ultra-Low Sulphur Diesel	50.4 p/litre	17.5%
Biodiesel used as a road fuel	30.4 p/litre	17.5%
Bioethanol used as a road fuel	30.4 p/litre	17.5%
LPG used as a road fuel	16.5 p/kg	17.5%
Natural gas used as a road fuel	13.7 p/kg	17.5%
Electricity	Zero	5.0%

Source: HM Revenue & Customs - Budget 2008.
Budget 2008 announced that the planned fuel duty increase of 2 p/litre due on 1st April 2008 will be delayed by six months until 1st October 2008.