No, there is absolutely no VAT on road tax (Vehicle Excise Duty or VED) in the UK. Because VED is a statutory government tax administered by the DVLA, it is completely outside the scope of VAT. It is not exempt; it simply falls completely outside the VAT system.
You’re not the only one who has ever paid their road tax and asked if VAT was added on. Vehicle Excise Duty (VED) is often mixed up with other costs linked to vehicles in the UK that do have VAT applied to them. We’ll clear things up, show you how VAT and road tax are different, and talk about the most recent changes for 2026.
What Is Road Tax (Vehicle Excise Duty)?
Road tax, whose full name is Vehicle Excise Duty (VED), is a tax that people in the UK have to pay to own or use a car on public roads. The Driver and Vehicle Licensing Agency (DVLA) collects it, and most cars have to pay it. The amount you pay depends on:
- Putting out CO2 emissions
- Type of fuel
- The car’s list price when it was brand new
- The date of the first registration
You can check the exact amount you need to pay using the official GOV.UK vehicle tax rates tool: Check vehicle tax rates on GOV.UK.
Is VAT Charged on Road Tax in the UK?
In the UK, there is no VAT on road tax.
Vehicle Excise Duty is a standalone excise tax. There is no VAT added to the amount you pay for road tax; the whole amount goes toward the fee. HM Revenue & Customs (HMRC) and the DVLA both agree on this: VED is not covered by VAT.
Why Do People Think There’s VAT on Road Tax?
The confusion often comes from other motoring costs where VAT does apply:
- Buying a new car – VAT is charged at 20% on the purchase price.
- Fuel – The cost includes fuel duty and VAT (at 20%).
- Vehicle repairs, servicing, and parts – Usually subject to VAT at the standard rate.
However, road tax is different — it’s a statutory charge and is never subject to VAT.
What Are the VED Rates for 2026/27?
Vehicle Excise Duty (VED) rates increased from 1 April 2026. If your car was first registered on or after 1 April 2017, the standard annual rate is now £200, up from £195 in the previous tax year. The standard rate for most vans also increased to £360.
If you’re buying a brand-new car, the amount of VED you pay in the first year depends on its official CO₂ emissions. Vehicles with lower emissions generally pay less, while higher-emission vehicles attract higher first-year rates.
If your vehicle was first registered before 1 April 2017, it continues to be taxed under the older VED system based on factors such as its registration date, CO₂ emissions or engine size. The applicable rates were also updated from 1 April 2026.
Whatever rate applies to your vehicle, VAT is never added to Vehicle Excise Duty. VED is a separate government tax and sits outside the UK VAT system.
Road Tax Exemptions in the UK
Some cars don’t have to pay road tax, but that will changed in April 2025. This is a list of important exceptions:
- EVs: While previously exempt, electric vehicles registered between 1 April 2017 and 31 March 2025 now pay the standard annual rate. Vehicles registered on or after 1 April 2025 pay a first-year rate before moving to the standard rate.
- Historic (Classic) Vehicles: Vehicles built before 1 January 1986 (or first registered on or before 7 January 1986) are exempt from paying VED, but you must still actively apply for the exemption.
- Disabled Passenger Vehicles: Not required if they are used by a disabled person who meets the requirements.
- Vehicles Used by Charities: Some vehicles that are only used for charitable reasons may not be subject to this rule.
Full exemption rules are listed here: Vehicles exempt from vehicle tax – GOV.UK.
Why Isn’t VAT Charged on Road Tax?
Vehicle Excise Duty and VAT are two completely different types of tax.
VAT is charged on the sale of most goods and services by VAT-registered businesses. Road tax, however, is a government duty collected by the DVLA for keeping a vehicle on public roads. Since it is a statutory tax rather than a commercial sale, VAT is not added to the amount you pay.
This is why the amount shown when you tax your vehicle is the final amount. There is no additional VAT included or charged separately.
Which Vehicle Costs Do Include VAT?
Many motorists assume that every vehicle-related payment includes VAT. In reality, only certain costs are subject to VAT.
These commonly include:
- Buying a new vehicle from a VAT-registered dealer
- Vehicle servicing and repairs
- Replacement parts and accessories
- Fuel purchased at petrol stations
- Vehicle leasing in many cases
- Car washing and valeting services
Road tax is one of the few regular motoring costs that does not include VAT.
Do Electric Vehicles Pay Road Tax in 2026/27?
Yes. EVs lost their VED exemption from 1 April 2025. A new electric car now pays £10 in its first year, then moves to the £200 standard rate from year two onwards.
If your EV was registered before April 2025, it’s not grandfathered in at £0. Once it comes up for renewal, it’s taxed at the same standard rate as any other vehicle in its category.
Frequently Asked Questions
Do you pay VAT on road tax in the UK?
No. VED is completely outside the scope of the UK VAT system.
Is VAT included when I buy a new car?
Yes — VAT is charged at 20% on new vehicle purchases.
Do I pay VAT on used cars?
Private sales usually don’t include VAT, but VAT may apply when buying from a VAT-registered dealer.
Do I pay VAT on fuel?
Yes — VAT at 20% is applied to the cost of fuel (including fuel duty).
Are electric vehicles exempt from road tax?
No. Electric vehicles now pay standard road tax rates just like petrol and diesel cars.
How do I check my road tax?
Use this tool: Check vehicle tax on GOV.UK.
Conclusion
In the UK, VAT does not apply to road tax, which is called Vehicle Excise Duty. VAT covers many car-related costs, such as buying a new car, fuel, and repairs. VED, on the other hand, is a separate excise fee with its own rules.
Under the current 2026/27 rules, more drivers, including those who own electric cars, will have to pay road tax. It’s important to keep up with official GOV.UK news. Before making a payment, you should always check the most up-to-date rates and exclusions.
Disclaimer: The information about “Is There VAT on Road Tax in the UK” is provided in this article including text and graphics. It does not intend to disregard any of the professional advice.
