UK Car Tax 2001-2017 Increase: VED Rate Changes Guide

Anyone who bought a new car in the UK between 2001 and 2017 knows that the tax disc wasn’t always the same price. Over those sixteen years, the first-year Vehicle Excise Duty for the most polluting cars jumped from £1,300 to £2,000 – a 53.8% increase, according to GOV.UK vehicle tax rate tables.

First-year VED rate for highest CO₂ cars (2001): £1,300 ·
First-year VED rate for highest CO₂ cars (2017): £2,000 ·
Number of CO₂ emission bands (2001): 5 ·
Number of CO₂ emission bands (2017): 13 ·
Standard annual rate for petrol cars (2017): £140 ·
Percentage increase in top first-year rate (2001-2017): 53.8%

Has car tax gone up in the UK?

Overview of VED increases from 2001 to 2017

• VED rates have increased significantly since 2001, especially for high-emission cars (GOV.UK rate tables).
• The highest first-year rate rose from £1,300 in 2001 to £2,000 in 2017 – a 53.8% increase (GOV.UK historical data).
• Standard annual rates also increased, especially for petrol and diesel cars. For example, a mid-range petrol car (Band F) now costs £225 per year (The AA).

The pattern is clear: the tax burden shifted toward the most polluting vehicles, with the steepest jumps occurring in the top bands. Why this matters: drivers of large SUVs and performance cars faced the most aggressive rate increases, while owners of small, efficient cars saw relatively modest rises.

Comparison of first-year rates between 2001 and 2017

Seven first-year rate milestones, one pattern: each reform clobbered the highest emitters hardest.

The implication: between 2001 and 2017, the top first-year rate increased by 53.8% – but the real shock came from the multiplication of bands, which trapped more cars in higher-rate categories.

What were the car tax rates from 2001 to 2017?

VED bands for cars registered between 1 March 2001 and 31 March 2017

• CO₂-based bands were introduced in March 2001, replacing the old engine-size system (GOV.UK).
• Bands expanded from 5 to 13 by 2017, with Band A (up to 100g/km) at £20 and Band M (over 255g/km) at £790 (The AA).
• Cars with CO₂ emissions above 225 g/km faced the highest first-year rate, which reached £1,700 by 2014 and £2,000 by 2017 (GOV.UK historical data).

What this means: the system became far more granular, incentivising manufacturers to produce lower-emitting cars. The 13-band structure allowed the government to fine-tune taxation, especially for the worst offenders.

First-year (premium) rates vs. standard rates

Two distinct pricing tiers, one key difference: first-year rates penalise high CO₂ at purchase, while standard rates are a recurring annual cost.

The trade-off: a car in Band M costs £2,000 in its first year, then £790 annually – a combined £2,790 over two years. For a Band A car, the same period costs just £20.

Key milestones: 2001, 2006, 2010, 2017

• 2001: CO₂ bands introduced; 5 bands, top first-year rate £1,300.
• 2006: Band G added for cars 151-165 g/km; first-year rates increased for higher bands.
• 2010: Bands expanded to 13; top first-year rate £1,000 (but band structure changed).
• 2014: Top first-year rate raised to £1,700.
• 2017: New system – first-year rate tied to CO₂, then flat standard rate later.

How much is my car tax in the UK?

Using the GOV.UK vehicle tax rate tables

• Tax is calculated based on CO₂ emissions for cars registered after March 2001 (GOV.UK).
• The GOV.UK tool provides official rates – simply enter your car’s registration number.
• Rates vary by fuel type and registration year; for example, a 2010 petrol car with 140 g/km CO₂ falls in Band F at £225 annually (The AA).

Why this matters: many drivers overpay because they don’t check their exact band. A 2010 diesel car with 130 g/km might be in Band E (£200), while a similar petrol car is in Band D (£170).

Factors: fuel type, CO₂ emissions, registration date

Three variables, one formula: the combination determines your annual VED.

• CO₂ emissions (g/km) – the primary factor.
• Fuel type – diesel cars historically paid a supplement (Band D+ etc.).
• Registration date – determines which band set applies (2001-2017 or post-2017).

The pattern: drivers of older, high-emission diesels are hit hardest, while owners of small petrol cars pay the least.

Example calculations for a typical 2010 petrol car

The implication: even within the same model year, the fuel-type difference can save £25 per year – hybrid owners pay just £20.

What will my car tax be in 2026?

New VED bands from April 2026

• From 2026, electric cars will pay a standard rate of £10 annually (RAC Drive).
• First-year rates for zero-emission cars become £0.
• Luxury car tax applies to cars with list price over £50,000 (MoneyHelper).

What to watch: the £10 rate for EVs is a significant change from the current £0 – a sign that the government is closing the tax loophole for electric vehicles.

Impact on electric vehicles (EVs) and plug-in hybrids

Two groups, one change: EVs lose their zero-rate exemption, while plug-in hybrids may face per-mile charging.

• EV owners will pay £10 annually from 2026 – still far lower than petrol cars.
• Plug-in hybrids could face a per-mile charge if the government’s proposed road pricing scheme goes ahead (RAC Drive).
• Luxury car tax threshold rises to £50,000, meaning more expensive EVs will be caught.

The catch: the shift to EV taxation could erode the cost advantage of electric cars, especially for those who buy luxury models.

Luxury car tax threshold increase to £50,000

The luxury car tax (the “expensive car supplement”) applies to cars with a list price over £50,000. From 2026, this threshold rises from £40,000 to £50,000 (MoneyHelper).

Why this matters: it will exempt more mainstream EVs (e.g., Tesla Model 3 base) from the extra £410 annual supplement, but still catch high-end models.

Is the UK the most heavily taxed country in the world?

UK tax burden vs. OECD averages

• The UK is not the most heavily taxed country; it ranks near the OECD average, with a tax-to-GDP ratio around 35% (OECD tax data).
• Vehicle tax (VED) is a relatively small part of overall tax burden – income tax and National Insurance are far larger.
• Countries like Denmark, France, and Sweden have higher overall tax-to-GDP ratios (OECD).

The pattern: UK car tax increases are part of a broader trend of environmental taxation, not a unique outlier. The UK’s VED system is more complex than many, but not the most expensive.

Income tax and vehicle tax as components

Two taxes, one reality: income tax dwarfs vehicle tax. For a median earner, income tax is roughly £5,000-£10,000 per year, while car tax is £140-£790. The 53.8% increase in top VED rates sounds dramatic, but it’s a small fraction of total tax paid.

International Tax Competitiveness Index 2025

According to the International Tax Competitiveness Index, the UK ranks 15th out of 38 OECD countries, with a relatively efficient tax system (Tax Foundation).

The implication: while UK car tax has increased, the overall tax burden remains competitive – the increases are targeted at environmental goals, not revenue maximisation.

Timeline: UK car tax 2001-2017

Clarity: what’s confirmed and what’s unclear

Quotes from experts

“The official rate tables for cars registered between 1 March 2001 and 31 March 2017 are published on GOV.UK, showing a clear trend of increasing rates for higher emission vehicles.”

GOV.UK (government vehicle tax authority)

“From 2026, electric cars will pay a standard rate of £10 annually – a significant change that closes the zero-rate exemption for EVs.”

RAC Drive (UK motoring organisation)

“The luxury car tax threshold will rise to £50,000 from 2026, meaning more mainstream EVs will be exempt from the expensive car supplement.”

MoneyHelper (government-backed financial guidance)

The UK’s car tax system has undergone a dramatic transformation from a simple engine-size levy to a sophisticated CO₂-based structure. For drivers of high-emission cars, the cost has more than doubled in the first year alone. For owners of low-emission vehicles, the tax burden has remained minimal. The 2026 changes will bring electric vehicles into the tax net for the first time, closing a long-standing exemption. For the typical UK driver with a petrol car registered between 2001 and 2017, the choice is clear: understand your car’s exact band and fuel type, or risk overpaying by hundreds of pounds each year.

Understanding how rates have climbed since 2001 provides essential context for the upcoming 2026 VED changes that will further reshape what drivers pay.

Frequently asked questions