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 2025.
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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
- 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.
Road Tax Exemptions in the UK
Some cars don’t have to pay road tax, but that will change in April 2025. This is a list of important exceptions:
- EVs—At the moment, they are excluded if they were registered for the first time before April 2025. The first day of April 2025, EVs will pay VED at the regular rate.
- Historic (Classic) Vehicles: Vehicles that are more than 40 years old don’t have to pay VED, but you still have to ask for 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.
2025 Changes to Road Tax
The government of the UK revealed changes that will affect electric and alternative fuel vehicles:
- After April 1, 2025, electric cars, vans, and motorbikes will pay the same VED as gasoline and diesel cars in the same category.
- EVs that cost more than £40,000 will also have to pay the Expensive Car Supplement.
- Rates will no longer be lower for hybrid cars.
Frequently Asked Questions
1. Do you pay VAT on road tax in the UK?
No. VED is exempt from VAT.
2. Is VAT included when I buy a new car?
Yes — VAT is charged at 20% on new vehicle purchases.
3. 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.
4. Do I pay VAT on fuel?
Yes — VAT at 20% is applied to the cost of fuel (including fuel duty).
5. Will electric vehicles remain exempt from road tax?
No — EVs registered from 1 April 2025 will pay the same road tax as petrol and diesel vehicles.
6. How do I check my road tax?
Use this tool: Check vehicle tax on GOV.UK.
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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, gas, and repairs. VED, on the other hand, is a separate excise fee with its own rules.
As 2025 approaches, 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 vat on road tax is provided in this article including text and graphics. It does not intend to disregard any of the professional advice.