Vehicle Excise Duty (VED)
Candlefocus EditorVED is based on the size of the car's engine and its CO2 emission levels. New vehicles are assigned to one of 13 bands - costing anything from £0 to over £2,000 per year. The amount is determined by the engine size and how polluting the vehicle is. The band the vehicle is placed in will be indicated in the registration document.
The price of VED is frozen for the first year a car is registered, but any subsequent year the rates are subject to review. In this way, the government can act as an incentive for people to purchase cars with lower emissions. Cars with no tailpipe emissions, such as electric and hydrogen, pay £0 VED in the first year. The standard charge for zero-emission vehicles in subsequent years is £0 per year.
If a vehicle is sold before the end of its VED cycle, the owner can claim a refund for any full months remaining in the payment period. Drivers must apply for the refund which typically takes six working days to process.
In order to ensure that every driver pays the correct amount of VED, the government carries out enforcement checks. Checks can be carried out in person at MOT stations or when a vehicle is presented at a vehicle registration office. The UK government is continuing to invest in enforcement of the VED rules to ensure that the correct vehicle tax payments are made.
Vehicle Excise Duty is an important way in which the government can ensure roads are kept in a good condition, whilst encouraging the purchase of less polluting vehicles. As VED money helps fund research and initiatives to combat climate change, it also serves as an important way to help improve air quality and reduce emissions.