What it costs to run a car in England: the year worked out from official rates

A car in Britain costs more than it looks at the point of purchase. Here is the year broken down from official figures — and how much of it the state takes.

Vehicle tax: £200 a year

From the second year, the standard rate of vehicle tax for most cars is £200 for 12 months. Paid monthly by Direct Debit it comes to £210: there is a surcharge for spreading it. Six months costs £110, or £105 by Direct Debit.

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The first year works differently, on CO2 emissions. For a zero-emission car that is £10; for 101 to 110g/km, £405; and for the dirtiest, over 255g/km, £5,690 in one go.

Expensive cars carry a separate charge. If the list price when new was over £40,000 (over £50,000 for an electric car), there is another £440 a year on top, for five years from the second time the car is taxed. That is the published price before any discounts, so it is worth asking the dealer for it in advance.

MOT: £54.85, and that is the ceiling

An MOT for a car costs no more than £54.85 — a set maximum a test station cannot exceed. There is no VAT on the fee. For a motorcycle the ceiling is £29.65.

The first MOT is due when the car turns three, and annually after that. Note that £54.85 buys the test only. Repairs arising from it are paid separately, and that is usually what hurts.

Petrol: nearly half the price is tax

In the week beginning 9 November 2026 the average price of a litre of petrol was 170.71p and diesel 198.19p. The gap between them is 27.5p a litre, which shows at every filling station.

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Fuel duty is 52.95p a litre, with 20% VAT on top. Work out what is left. Of petrol's 170.71p, 52.95p is duty and 28.45p is VAT: together 81.40p, or 47.7% of the price. In diesel the tax comes to 85.98p — 43.4%.

What does that mean over a year? The 2025 travel survey puts the average petrol car in England at 6,200 miles. At 40mpg that is about 705 litres — roughly £1,203 of fuel, of which £373 is duty and £200 is VAT.

Insurance: £566

The average motor premium actually paid in the second quarter of 2026 was £566, £6 more than the quarter before. Adjusted for inflation it is £14 lower than a year earlier.

Why it is not falling further: the average claim has risen to £4,900, and insurers paid out a record £3.2 billion over the quarter, 7% more than a year before. Repairs are getting dearer, and that works its way back into premiums.

The total: about £2,000 a year

Add it up for an average petrol car: £200 tax, £54.85 MOT, £1,203 fuel, £566 insurance. That comes to about £2,024 a year, or roughly £169 a month.

And here is the part worth knowing on its own: £773 of that is tax. Vehicle tax plus duty and VAT on fuel account for 38% of the cost of running the car. Nearly two pounds in every five go to the Treasury before anything has broken.

None of this includes servicing, tyres, parking, washing or depreciation. Nor London's driving charges — check the rates for your own route on the Transport for London site.

How to shave the bill

Pay the tax for 12 months at once rather than monthly: that is £10 saved for nothing. Shop around at every insurance renewal instead of letting it roll over. And work out the miles per gallon before you buy: at 6,200 miles a year, the difference between 35 and 50mpg is around £360 annually.