Motorists driving petrol and diesel cars registered before a specific date in March 2006 benefit from a car tax discount, with fees capped at £445 due to a particular rule. Vehicle Excise Duty (VED) is a legal requirement for using the road, with almost all motorists paying some form of charge. VED rates vary depending on the vehicle's age and overall emissions, with more polluting models often paying more.
How the pre-2006 cap works
Cars registered between 2001 and 2017 pay tax fees on a sliding scale, with vehicles placed into one of 13 tax bands. However, vehicles registered before March 2006 are treated differently, with a separate cap in place regardless of how many emissions their car emits.
According to experts at Compare the Market, “Cars first registered before March 23, 2006, will pay a maximum cap of £445 even if they emit more than 225 g/km of CO2 for a 12-month annual payment.”
Comparison with newer cars
Cars registered after March 23, 2006, do not enjoy the benefit and can be charged even more, with higher Band L and Band M rates also available. Band L fees apply to cars emitting between 225 and 255g/km of CO2, registered after March 2006 but before 2017, with fees currently at £760 per year. Meanwhile, Band M rates are for models built from 2006 to 2017 that emit over 255g/km of CO2, with road users paying £790 per annum.
Cars registered after 2017 enjoy the best deal, with a more affordable £200-per-year standard VED fee. Peter James Insurance explained that the pre-2006 rule was being “rediscovered” by motorists in recent years as cars from the mid-noughties are now becoming modern classics.
Experts explain the rediscovery
Mr James said: “That means two mechanically similar cars — one registered on 22 March 2006 and one on 24 March 2006 — can have significantly different annual tax bills purely because of their registration date.
“This is not a new rule. It has existed for nearly 20 years. What is happening now is that cars from that period are reaching modern-classic status, and the tax gap is being rediscovered.”
Motorists can pay their road tax in one upfront sum or spread the annual fee throughout the year, although road users who opt for more than one payment will have to pay 5% more. The RAC said: “If you are the registered keeper of a vehicle, you will automatically receive a reminder before the tax is due to expire, which is always at the end of a given month.”
