Is Road Tax Included in a Car Lease?

Here at Nationwide Vehicle Contracts, one question we are often asked by customers is whether road tax is included in our lease deals. 

In short, yes, road tax is included in your car lease. The finance company that owns the car arranges it and pays for it themselves, and the cost is built into your monthly payments. 

To help keep you in the know, we'll go into detail about taxing your lease car, including who is responsible and what happens if road tax increases during your lease. 

When you lease a car, your finance provider (funder) is the registered keeper. As they own the vehicle and hold the V5C logbook, the legal responsibility for road tax sits with them, not you. 

Therefore, when you're browsing one of our lease deals, road tax is included in your monthly rental. 

Here's how it works in practice: 

• Before delivery - The funder taxes the car when it's first registered, so it arrives at your door road-legal from day one. 
• Each year of your contract - Renewal happens automatically. The DVLA sends your road tax reminder to the funder, and they'll sort it out their end. 

• Personal and Business Contract Hire - The funder taxes the car for the entire length of your agreement. 
• Finance Lease - With a finance lease agreement, the funder typically only provides road tax for the first 12 months, after which renewing it becomes the customer's responsibility.

If road tax rates increase during your contract, your funder may pass on the difference, as your monthly payments were calculated using the rate at the start of your agreement. 

In practice, this tends to be a small one-off charge or minor adjustment. 

If you are on a contract hire or personal contract hire agreement and want to check that your vehicle has been taxed, you can check your lease vehicle has up to date vehicle tax by visiting the DVLA website.

In order to do this, you will need:

• The registration number of the vehicle
• The make of the vehicle

If, for any reason, your vehicle tax is out of date, it is important that you call your finance provider ASAP to report the issue. 

Vehicle Excise Duty, better known as vehicle tax, car tax or road tax, is a tax you must pay on any vehicle used or parked on public roads in the UK.

The only exception is a vehicle that's been declared off the road with a Statutory Off Road Notification (SORN), which we'll come to below.

How much a lease car costs to tax depends on CO2 emissions in the first year, from £10 for electric cars, then a flat standard rate of £200 a year from year two. 

Contrary to popular belief, road tax doesn't only pay for roads. VED goes into the government's central fund alongside other taxation, covering everything from healthcare to education. 

No. A SORN can only be made by the registered keeper, which is the finance provider. 

Since the funder is contractually obliged to keep the vehicle taxed for your agreement, a leased car stays taxed and road-legal for the duration, even if you're not driving it much.

If your circumstances have changed and the car is sitting unused, it's worth a conversation about your options instead. Our guide to early termination explains what's involved.

Yes, road tax is included on an electric car lease, exactly the same as any other lease. The only thing that's changed is that electric cars are no longer exempt from paying it.

Since April 2025, EVs pay road tax like everyone else: £10 in the first year, then the £200 standard rate from year two.

However, rest assured that none of this lands on you. The funder taxes the car, and the cost is already built into your monthly rental. For a full picture of what an electric car costs to run, see our guide to electric car running costs. 

No. Road tax is included in every lease, but insurance isn't. You'll need to arrange fully comprehensive cover before your car is delivered, in your own name.

Our guide to insuring your leased vehicle covers exactly what's required.

If you take one thing from this guide, make it this: lease through us and road tax is handled for your whole contract. The funder taxes the car before it arrives, renews it every year, and absorbs the admin you'd otherwise deal with. 

Trusted since 2002, with 180,000+ leases arranged. We've helped thousands of drivers get behind the wheel of their dream car. Find out more about car leasing or browse our latest deals.