Finance and Credit Advice

The Costs of Running a Car

The Costs of Running A Car

Updated 22 September 2025

When buying or leasing a car, it’s easy to focus only on the purchase price or monthly finance payments. But running a vehicle involves a variety of ongoing expenses that can quickly add up. This guide breaks down the essential standing charges you’ll pay regardless of usage, and the main running costs you’ll face once you hit the road. Understanding these will help you budget more accurately for the year ahead.

Standing Charges

Standing charges are costs you must pay even if you don’t use your car regularly.

Car Tax

Car tax (also known as Vehicle Excise Duty or VED) is a legal requirement for most cars on UK roads. The amount you pay depends on when your car was registered and its emissions.

Cars registered between 1 March 2001 and 31 March 2017: Tax is based on the type of fuel your car uses and its CO₂ emissions, as recorded on the V5C logbook.
Cars registered from 1 April 2017 onwards: The first year tax is calculated from CO₂ emissions. After that, most vehicles pay the same standard annual rate, unless they are zero-emission.
Electric cars: Fully electric vehicles are exempt from car tax if their original list price was under £40,000.
Premium vehicles: Cars with a list price of over £40,000 attract an extra £320 each year for the first five years (from the second tax payment onwards).

MOT

All cars over three years old must pass an annual MOT to ensure they meet safety and environmental standards.

The maximum legal fee for a car MOT is £54.85.
Additional costs apply for parts and labour if repairs are needed.
The test covers safety-critical checks including brakes, tyres, exhaust and emissions, steering, suspension, lights, mirrors, seat belts and more.

Insurance

To legally drive, you must have at least third-party car insurance. Premiums vary widely, depending on factors such as your driving history, postcode, age, the car you drive, and the level of cover you choose.

Types of cover include:

Third party: Meets the minimum legal requirement; covers damage or injury to others but not your own car.
Third party, fire and theft: Adds protection against your car being stolen or fire damage.
Comprehensive: Includes third party, fire, and theft plus protection for your own vehicle. If you lease a car, comprehensive cover is compulsory.

Lower insurance groups usually mean cheaper premiums, so choosing your car wisely can cut costs.

Running Costs

Running costs are the expenses you only pay when you use your car. The more miles you drive, the more these will rise.

Fuel

For many drivers, fuel is the single biggest running cost. Several factors affect fuel spend, including:

The number of miles driven annually
Whether your car uses petrol, diesel, hybrid, or electricity
Fuel efficiency (miles per gallon or kWh per mile)
Driving style and speed
Local fuel prices at the pump

Parking, Congestion and Tolls

Urban drivers may face additional charges:

Pay-and-display or permit parking fees
Congestion charges in cities like London
Toll roads, tunnels, or bridges

If you commute into busy areas, these can add up to a significant part of your monthly spend.

Servicing

While servicing your car isn’t a legal requirement, it is strongly recommended. Following the manufacturer’s guidelines ensures your vehicle runs efficiently, reduces the likelihood of breakdowns, and helps maintain resale value.

Typical service costs can vary, but expect additional expenses for new tyres, brake pads, filters, and other parts.

Breakdown Cover

Breakdown cover is optional but offers peace of mind. Without it, arranging roadside recovery or emergency repairs can be costly. Policies often include extras such as home recovery, onward travel, or roadside assistance throughout the UK and sometimes abroad.

Final Thoughts

Running a car involves much more than just paying upfront for the vehicle. From mandatory charges such as tax, insurance, and MOT, to variable costs like fuel and parking, it’s essential to plan for all expenses when budgeting. By staying on top of maintenance and shopping around for the best deals, you can keep your motoring costs under control while avoiding any unwanted financial surprises.

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