If you’ve ever paid your road tax and wondered whether VAT was added, you’re not alone. Many UK drivers mix up Vehicle Excise Duty (VED) with other vehicle-related costs that do include VAT. In this guide, we’ll explain exactly whether VAT is charged on road tax, why there’s confusion, the 2025 updates, exemptions, and what this means for petrol, diesel, hybrid, and electric vehicle owners.
Summary
“This article clears up the confusion about VAT on road tax in the UK and explains the latest 2025 rules.”
What Exactly Is Road Tax (Vehicle Excise Duty)?
Road tax, officially called Vehicle Excise Duty (VED), is a mandatory tax for most vehicles driven or kept on public roads in the UK. It’s collected by the Driver and Vehicle Licensing Agency (DVLA) and is calculated based on several factors, including:
- CO₂ emissions of the vehicle
- Type of fuel (petrol, diesel, hybrid, electric)
- The vehicle’s list price when new
- Date of first registration
The 2025 VED rates have been updated to include electric vehicles and hybrid cars in standard charges. To find out exactly what you owe, you can use the official GOV.UK Vehicle Tax Rates Tool.
Summary
“Road tax is a legal requirement for most UK drivers, with costs based on emissions, fuel type, price, and registration date.”
Is VAT Charged on Road Tax in the UK?
No — VAT is not charged on road tax in the UK. VED is an excise tax, not a VATable supply. This means when you pay your road tax to the DVLA, the entire amount goes towards the tax itself, not VAT.
According to HM Revenue & Customs (HMRC) and the DVLA, VED is specifically excluded from VAT. The VAT Act 1994 confirms that taxes, duties, and similar levies set by law are not subject to VAT unless explicitly stated.
Summary
“Vehicle Excise Duty is not subject to VAT — the full payment is for the tax only.”
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Why Do People Think There’s VAT on Road Tax?
The confusion comes from the fact that many other motoring costs do include VAT, such as:
- Buying a new car — VAT at 20% is applied to the purchase price.
- Fuel — Includes both fuel duty and 20% VAT.
- Vehicle repairs, servicing, and parts — Usually VAT at the standard rate.
Because these costs are so closely linked to vehicle ownership, it’s easy to mistakenly assume road tax also has VAT applied.
Summary
“People often confuse road tax with other vehicle costs like fuel and repairs, which do include VAT.”
What Are the 2025 Changes to Road Tax in the UK?
From 1 April 2025, major changes will affect road tax for electric and alternative fuel vehicles:
- Electric Vehicles (EVs) — Will no longer be exempt from road tax. They will pay the same VED rates as petrol and diesel cars in their category.
- Expensive Car Supplement — EVs costing more than £40,000 will pay the additional yearly supplement for five years after the first registration.
- Hybrid Cars — Reduced VED rates for hybrids will be removed.
- Historic Vehicles — Still exempt if over 40 years old, but must be applied for.
Summary
“From April 2025, electric and hybrid vehicles will lose their road tax discounts and pay standard rates.”
Do You Pay VAT on Road Tax for Electric Vehicles?
No — even after April 2025, electric vehicles will pay road tax, but VAT will still not apply. The amount will be set by the DVLA based on emissions bands and pricing rules.
Summary
“Electric vehicles will start paying road tax in 2025, but VAT still won’t apply.”
Which Vehicles Are Exempt from Road Tax?
Some vehicles are exempt from VED, meaning they don’t pay road tax (and therefore have no VAT implications). In 2025, the exemptions include:
- Historic Vehicles — Over 40 years old.
- Disabled Passenger Vehicles — Used by eligible disabled drivers.
- Charity Vehicles — Used solely for charitable purposes.
- Electric Vehicles registered before April 2025 — Will remain exempt until that date.
Summary
“Some vehicles are exempt from paying road tax altogether, meaning VAT is irrelevant.”
Do You Pay VAT on Used Cars and Other Vehicle Purchases?
This is where VAT often appears in related vehicle transactions:
- New cars — Always have 20% VAT unless zero-rated (rare).
- Used cars — Private sales usually don’t include VAT, but VAT may be charged by VAT-registered dealers.
- Imported cars — May have VAT and customs duties.
Summary
“VAT applies to new cars, some used cars, and imports — but not to road tax.”
Do You Pay VAT on Fuel in the UK?
Yes — fuel prices in the UK include:
- Fuel Duty — A set rate per litre.
- VAT at 20% — Applied to the total cost including fuel duty.
This is a major reason people assume VAT on road tax exists — because fuel is subject to both VAT and duty.
Summary
“Fuel prices include both VAT and fuel duty, unlike road tax which has no VAT.”
How to Check Your Road Tax and Payment Details
You can check your vehicle’s tax status at any time using the Check if a Vehicle is Taxed tool on GOV.UK. This will confirm:
- Tax due date
- Amount payable
- Any exemptions applied
Summary
“The GOV.UK vehicle tax tool can confirm how much road tax you owe and whether any exemptions apply.”
Frequently Asked Questions About VAT on Road Tax
- Do you pay VAT on road tax in the UK?
No — VAT is not applied to road tax payments. - Is VAT included when I buy a new car?
Yes — at 20% on the purchase price. - Do I pay VAT on a used car?
Private sales usually don’t include VAT; dealer sales might. - Do I pay VAT on fuel?
Yes — at 20% on top of fuel duty. - Will electric vehicles remain exempt from road tax?
No — from April 2025, EVs will pay road tax like petrol and diesel vehicles.
Summary
“These FAQs summarise the most common questions about VAT on road tax and related vehicle costs.”
Key Takeaway
There is no VAT on road tax in the UK — and that applies to petrol, diesel, hybrid, and electric vehicles. While many motoring costs do include VAT, VED is a separate tax governed by its own rules.
With changes coming in April 2025, especially for electric vehicles, drivers should stay updated using official GOV.UK resources before making payments.
Summary
“Road tax is VAT-free, but changes in 2025 mean more drivers — including EV owners — will be paying it.”
Disclaimer: The tools and content on TaxCalculatorUK are for informational purposes only and do not constitute tax or financial advice. Our calculators provide basic estimates and may not reflect the latest tax laws.
We recommend consulting a certified tax professional or the HM Revenue and Customs Dept (HMRC) for accurate guidance. TaxCalculatorUK is not responsible for any decisions made based on the information provided.
