Cost of owning and running a car

The cost of owning and running a car can be higher than you think. You don't just pay for the purchase price, you also need to pay car insurance, MOT, car tax, maintenance, parking and road charges when needed. The car can also go down in value by around 16% a year.  

Money Helper, a government-approved online advice service, has a car costs calculator to help you work out exactly how much it would cost to own a certain car.   

Average annual cost of running a car based on data from Money Helper, car insurance, and government car tax (vehicle excise duty) rates is £3,186 for outer London and £3,502 for inner London:  

infographic with average car ownership costs for things like car insurance, car tax and repairs

The costs of running a car can change.

Car tax (vehicle excise duty)

You must pay car tax when the car is first registered, based on your vehicle's CO2 emissions, and then every 6 or 12 months at a different rate. For petrol or diesel cars registered after April 2017, tax renewal costs £180 per year, and much more for high-value cars. You can find car tax rates on

You may want to consider an electric car as you do not currently need to pay car tax on any zero-emission vehicles until April 2025.


Your car also needs fuel to run and the cost of fuel has been steadily rising in recent years. In October 2023, the typical cost of a litre of petrol or diesel is around £1.60. The average annual fuel cost for a car was £1,206 in December 2022, based on data from Money Helper.

Car insurance

You must have car insurance to drive legally in the UK. Insurance costs continue to rise and sometimes your premium, which is the amount you pay each month for your insurance, can increase through things that are outside of your control. Insurance costs can also reduce. For example, many insurers offered reductions for limited car use during the coronavirus pandemic.

The latest average annual car insurance costs are £1,187 in outer London and £1,503 in inner London, based on data from car insurance, from September 2023. 

MOT, service and repairs

Your car must pass a yearly MOT for you to drive it legally in the UK. (New cars do not need an MOT until three years after they have been registered with the DVLA). Most MOTs cost between £50 and £60 but the cost can rise if repairs are needed.

It is sensible to keep your vehicle well maintained for safety and economic reasons. However, as your car becomes older, repairs can often become more complex and costly, and you may find it is more economical to replace your car than to pay the high repair costs.

The average annual cost for MOT, service and repairs for a car was £613 in December 2022, based on data from Money Helper.


Parking charges and extended stays in some public car parks can add up. Also, council residents' parking permits in Controlled Parking Zones (CPZs) can cost up to £120 a year or more.

Road charges

You will need to pay the Congestion Charge to drive your car within central London 07:00-18:00 Monday-Friday and 12:00-18:00 Sat-Sun and bank holidays. No charge between Christmas Day and New Year's Day bank holiday (inclusive).

You will also need to pay the £12.50 Ultra Low Emission Zone (ULEZ) daily charge to drive with in the ULEZ zone if your vehicle does not meet the ULEZ emissions standards. The ULEZ covers all London boroughs, and the M25 is not in the zone. It operates 24 hours a day every day of the year, except for Christmas Day.

Alternative travel options

Many other travel options may save you money or improve your health, such as:

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