Vehicle excise duty (VED)

Commonly known as road tax or car tax, Vehicle Excise Duty (VED) is the annual tax that the owner of a vehicle has to pay to the government for it to be used (or parked) on public roads. The amount of VED that has to be paid in the first year of ownership is dependent on the amount of CO2 emitted by the car, as measured by official tests. After the first year, owners of all vehicles pay the same amount, but owners of more expensive cars (currently costing over £40,000 when new) also have to pay an additional £320 a year from the second to the sixth years.