First year tax rates explained

  • First year rates tied to CO2 emissions
  • Can vary from £0 to £2,175 for some cars
  • Zero emission EVs the cheapest to run

There’s a seemingly endless list of running costs when it comes to owning a car – from the big things like monthly finance and servicing to consumables like tyres, brake pads and oil.

That’s before you’ve considered fuelling the thing, and last but not least paid Vehicle Excise Duty, otherwise known as car tax. How much you need to pay has been calculated using a variety of methods over the years – from engine size to the amount of pollution coming from the exhaust, meaning it’s quite a confusing subject.

Thankfully for the last few years the annual cost of taxing your car is more or less the same regardless of specification. We've got more information on this in our new car VED rates article.

The only exception is during the first year, which we will now explain. There's a table of what you can expect to pay at the bottom of this article, too.

What is first-year tax?

Vehicle tax was previously calculated using the amount of CO2 produced – heavy polluting cars paid more, cleaner ones less, in order to provide an incentive for buying a low emission car. Now though everyone pays a flat rate as described above.

For the first year though you’ll pay an amount based on the car’s CO2 emissions, sometimes known as a showroom tax, which can add a significant amount to the bottom line of a high emission car.

It ranges from £0 for models with zero tailpipe emissions (electric cars, in other words) all the way up to £2,175 for the dirtiest emitters.

Why did prices rise in April 2020?

Mainly because April 2020 was the first tax year under the new, stricter WLTP test cycle. This is how the amount of CO2 produced by a car is calculated and it’s a much more realistic test now, resulting in a higher output of emissions than the old NEDC test. Tax bands are now linked to inflation too, meaning a rise in how much you pay.

2020 Audi A8 plug in hybrid

A separate emissions standard called RDE2 also has an effect – if you drive a diesel that does not comply with this test then you’ll be charged more than a compliant petrol or diesel model.

Note that alternative fuel cars are also judged by their output – only if your car produces less than 50g/km of CO2 will you get away with paying nothing for the first year tax. Any more than that and the first year rate is only marginally cheaper than a petrol or diesel car.

It doesn’t seem that long ago that any car producing less than 100g/km of CO2 was entitled to free road tax, and now only those with zero emissions are eligible. Such is the rapidly changing landscape around what the Government is willing to endorse as environmentally friendly.

Here's what you should expect to pay...

CO2 (g/km) Diesel (RDE2)* and petrol
Non-RDE2* diesels Alternative fuel
0  £0 £0  £0
1- 50
 £10 £25  £0
51 - 75
 £25 £110  £15
76 - 90
 £110 £135  £100
91 - 100
 £135 £155  £125
101 - 110
 £155 £175  £145
111 - 130
 £175 £215  £165
131 - 150
 £215 £540  £205
151 - 170
 £540 £870  £530
171 - 190
 £870 £1,305  £860
191 - 255
 £1,305 £1,850  £1,295
226 - 255   £1,850 £2,175  £1,840
Over 255   £2,175 £2,175  £2,165

Further reading

>> Best used cars with free car tax

>> New car VED rates

>> What is a plug-in hybrid