Vehicle Excise Duty (VED)

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Vehicle Excise Duty (VED)

Vehicle Excise Duty (VED) is a tax on most vehicles driven or parked on UK roads. It is collected annually and, for vehicles registered from April 2017 onward, the first-year rate is based on the vehicle’s carbon dioxide (CO2) emissions; subsequent annual payments are not linked to emissions.

How VED works today

  • Vehicles must be licensed and VED paid for legal use on UK roads.
  • For cars registered from April 2017, the first-year charge depends on CO2 emissions; later years are charged at standard rates.
  • Enforcement is electronic: vehicle licensing records and Automatic Number Plate Recognition (ANPR) systems are used instead of the old paper tax disc.

Brief history and evolution

  • Late 19th–early 20th century: The UK introduced the first vehicle-related taxes and registration requirements to control car use and address road conditions.
  • 1909: A tax based on engine power was introduced to fund road improvements.
  • 1910–1920: The Road Board and then the Road Fund were established to manage road policy and funding. Revenue was often diverted for other uses; by 1937 VED collections were paid into the Consolidated Fund.
  • 1956: The Road Fund was closed; VED remained as a general government receipt.
  • 1970s–1980: Abolition of VED was considered and rejected; the tax was retained.
  • 1999 onward: VED began to be tied to vehicle emissions. New cars were placed into emissions-based bands, with incentives for cleaner fuels; additional bands were introduced in subsequent years.
  • 2009: A major revision introduced 13 VED bands for new cars.
  • 2014: The paper tax disc was abolished and replaced with electronic records.
  • 2017: A further overhaul of bands and rates changed charges substantially for many new cars.

Key implications for drivers

  • Newer cars may face different first-year fees based on emissions; long-term annual charges follow standard rates regardless of emissions.
  • Licensing and compliance are checked electronically, so displaying a paper disc is no longer required.
  • VED policy has evolved to encourage cleaner vehicles through banding and first-year charges tied to emissions.