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1999 ford fiesta finesse review

Whether they call it car tax, road tax or the road-fund license, every year UK motorists have to stump up for Vehicle Excise Duty (VED), to use its official name. Yearly bills can be modest or massive depending on your car and it’s definitely worth knowing exactly how much you’ll have to budget for.

The VED system will be overhauled in 2017 and we’ve written a guide to explain how this affects you. One thing won’t change, though: VED will still be levied according to the amount of carbon dioxide (CO2) emitted by your car. The greater this figure, the bigger your annual bill will be.

At the moment, two systems are in operation. Cars first registered for UK use before 1 March 2001 are VED rated according to the size of their engine, with larger engines qualifying for a higher level of tax. Cars registered after that date, which accounts for the majority on our roads today, are rated on their CO2 output.

Business and company-car users are affected by a separate tax that takes into account both CO2 emissions and the value of the car. It’s somewhat more complex than for private drivers, so we’ve created a guide that explains the rules for company-car tax in an uncomplicated way.

VED tax bands for cars registered after 1 March 2001

Every car registered from 1 March 2001 is liable for Vehicle Excise Duty according to the amount of CO2 emitted by its exhaust, a value expressed in grams per kilometre (g/km). The VED rates are organised into bands from A to M, based on the level of CO2 emitted. Two rates are given: one figure refers to the first-year rate – VED paid at the point of the car’s initial registration by the first owner. This is typically included in a new car’s ‘on-the-road’ price. The second figure refers to VED paid every subsequent year that the car is used.

The table below shows exactly how much VED you’ll need to pay if your car was registered on or after 1 March 2001.

VED tax bands for cars registered before 1 March 2001

If your car was first registered before 1 March 2001, working out how much tax you’ll pay is a far simpler affair as there are only two groups, based on engine size.

If your car’s engine is under 1,549cc, you’ll pay £145 a year to tax it, whereas cars with engines larger than 1,549cc are liable for an annual road-tax bill of £230. If you’re after a very cheap older car (perhaps a ‘station car’ for your commute to work) then keep an eye out for models with a 1.5-litre engine or smaller, as you’ll save yourself a fair bit of money each year.

Cars that are 40 years old (or more) are considered classics and are exempt from road tax.

During the Government’s 2015 Budget, a big shake-up of the UK’s road-tax system was announced. These changes will be implemented in April 2017 and will only affect cars bought after that date. Cars registered or bought before then will continue to be taxed under the current system.

Our table below details these changes and you can click here for the full lowdown on the new system.