The New Car Tax Rules

calculator and papers

Don't get into a pickle over car taxation, we explain all!

The price of an annual car tax disc is now based on how much carbon dioxide (CO2) a car emits and what fuel it uses. The old system of car road tax, which was based only on engine size, was changed to encourage drivers out of gas-guzzling, high-emissions older cars and into newer, smaller-engined ones.

Fueling debate

The Government hopes that the CO2-based system will encourage the purchase of more fuel-efficient vehicles and those emitting less carbon dioxide (CO2 output is proportionate to the amount of fuel burned), and also to get drivers to use more environmentally-friendly fuels.

How is it worked out?

There are six CO2 grades. No new cars on sale currently meet the criteria for the lowest Band A (emitting up to 100g/km) bar special-order electric models, but a number of small city cars, and larger hybrids such as the Honda Civic IMA and Prius, qualify for Band B (101-120g/km). Inside these six bands, there are additional penalties or incentives based on the type of fuel used: alternative fuels get a part-rebate, while diesel fuels are penalised for their increased particulate emissions. Breakdown of rates :

Bands CO2 rating
12 month
12 month
Alternative fuel
12 month
Band A Up to 100 £75 £65 £55
Band B 101-120 £85 £75 £65
Band C 121-150 £115 £105 £95
Band D 151-165 £135 £125 £115
Band E 166-185 £160 £150 £140
Band F Over 185 £170 £165 £160

Older cars

If your car was registered before 1st March 2001, then the Vehicle Excise Duty you have to pay is based on your engine size: £110 for 12 months on vehicles up to 1549cc and £165 for those over 1549cc

Useful Websites

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  • Anne Mills Taxation Recruitment
    A bespoke recruitment firm who specialise only in tax appointments and are actively engaged in placing candidates and fulfilling project briefs within the accountancy profession and industry commerce
  • Kestrel Taxation Services Limited
    Specialise in tax investigations including Special Compliance Office and Tax and NIC planning
  • Packman Leslie & Company
    Help small businesses and their owners with all of their financial and taxation
  • Michael Reader
    Chartered accountant who, as a Fellow of the Institute of Taxation and former inspector of taxes, provides specialist taxation consultancy to businesses, individuals and fellow professional advisers
  • Kinnaird Hill
    Chartered accountants in Cambridge providing auditing, taxation, accounting and financial services
  • Manson & Partners
    Accountancy, taxation, insolvency and other financial services in Dumfries, South West Scotland
  • Add Your Website

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