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Vehicle excise duty (VED)

What is vehicle excise duty (VED)?

Commonly known as road tax or car tax, Vehicle Excise Duty (VED) is the annual tax that the owner of a vehicle has to pay to the government for it to be used (or parked) on public roads.

The amount of VED that has to be paid in the first year of ownership is dependent on the amount of CO2 emitted by the car, as measured by official tests. After the first year, owners of all vehicles pay the same amount, but owners of more expensive cars (currently costing over £40,000 when new) also have to pay an additional £320 a year from the second to the sixth years.

Related Jargon

What is the DVLA?

The Driver and Vehicle Licensing Agency (DVLA) is the government agency responsible for maintaining databases of UK drivers and vehicles. It currently holds over 48m driver records and over 40m vehicle records. 

What are a car's CO2 emissions?

When petrol or diesel burns in an engine, carbon dioxide gas – also known as CO2 – is the result.

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