Understanding Car Tax in the UK: A Comprehensive Guide

Owning a car in the UK comes with a range of responsibilities, and one of the most important is paying car tax. Also known as Vehicle Excise Duty (VED), car tax is a legal requirement for most vehicles on UK roads. In this guide, we’ll cover everything you need to know about car tax, from how it’s calculated to how to pay it.

What is Car Tax?

Car tax is an annual fee that most vehicle owners in the UK must pay to legally drive their cars on public roads. The amount of tax you pay depends on several factors, including your vehicle’s age, fuel type, and CO2 emissions. The money raised from car tax goes towards maintaining and improving UK roads and infrastructure.

Car Tax Statistics

Here are some key statistics about car tax in the UK:

Source: gov.uk, 2023

Get Quotes

How is Car Tax Calculated?

The amount of car tax you pay depends on when your vehicle was first registered. For cars registered after April 1, 2017, the tax rate is based on the vehicle’s CO2 emissions in the first year, and a standard rate applies for subsequent years. Cars with higher emissions pay more tax, while electric vehicles are exempt.

For cars registered before April 1, 2017, car tax is based on the vehicle’s engine size or fuel type and CO2 emissions.

Car Tax Bands

Here’s a breakdown of the current car tax bands for vehicles registered after April 1, 2017:

Source: gov.uk, 2023

Checking and Paying Your Car Tax

To check your vehicle’s tax status and renewal date, you can use the government’s online service. Simply enter your vehicle’s registration number and the website works to retrieve the information. You can also check your vehicle’s MOT history and tax rate.

When it’s time to renew your car tax, you have several payment options:

• Online via the government website using a credit card or debit card
• By phone using a credit card or debit card
• At a Post Office branch using cash, a cheque, a credit card, or a debit card
• By Direct Debit (for renewals only)

It’s important to note that you’ll need a valid MOT certificate and insurance certificate to tax your vehicle. If you’re buying a used car, make sure to check its tax status before making the purchase.

Get Quotes

Declaring Your Vehicle Off-Road (SORN)

If you’re not planning to drive your vehicle for an extended period, you can declare it as off-road using a Statutory Off-Road Notification (SORN). This exempts you from paying car tax while the vehicle is not in use on public roads. You can make a SORN declaration online, and it’s essential to do so if your vehicle is untaxed and not being used.

Car Tax Exemptions and Discounts

Some vehicles are exempt from paying car tax, including:

• Electric Vehicles (until April 2025)
• Vehicles used by disabled persons
• Classic vehicles over 40 years old
• Agricultural vehicles

Hybrid cars and vehicles running on alternative fuels like liquid petroleum gas (LPG) may also qualify for discounts on car tax.

Car Tax Penalties

Failing to pay your car tax can result in hefty penalties. If you’re caught driving an untaxed vehicle, you could face a fine of up to £1,000. The DVLA also uses Automatic Number Plate Recognition (ANPR) cameras to identify and track untaxed vehicles. If your vehicle is found to be untaxed, you could face enforcement action, including fines, clamps, or even having your vehicle impounded.

Key Takeaways

• Car tax is a legal requirement for most vehicles on UK roads
• The amount of tax depends on your vehicle’s age, fuel type, and CO2 emissions
• You can check your vehicle’s tax status and renewal date online
• Payment options include online, by phone, at the Post Office, or by Direct Debit
• Declaring your vehicle off-road (SORN) exempts you from paying tax while it’s not in use
• Failing to pay car tax can result in fines, penalties, and enforcement action

Get Quotes

Your Car Tax Questions Answered

1. How often do I need to pay car tax?

Car tax is usually paid annually, but you can choose to pay in monthly or six-monthly instalments for a small additional fee. The vehicle tax reminder will be sent to you about three weeks before your current tax is due to expire.

2. Can I drive my car while waiting for my tax to be renewed?

No, it’s illegal to drive a vehicle on public roads without valid tax. The only exceptions are driving to a pre-booked MOT appointment or to a garage for repairs. Make sure to tax your vehicle before driving it.

3. What if I sell my car?

If you sell your car, you can claim a refund for any remaining full months of tax. The new owner will be responsible for taxing the vehicle in their name. Notify the DVLA of the change of ownership as soon as possible.

4. Can I transfer my car tax to a new vehicle?

No, car tax cannot be transferred between vehicles. When you buy a new car, you’ll need to tax it in your name before driving it. Any remaining tax on your old vehicle can be refunded to you.

5. What happens if I don’t pay my car tax?

Driving without valid car tax is illegal and can result in fines, penalties, and enforcement action. If you’re caught driving an untaxed vehicle, you could face a fine of up to £1,000 and your vehicle could be clamped or impounded.

6. How do I find my car’s tax class and rate?

Your vehicle’s tax class and rate are determined by factors like its age, engine size, fuel type, and CO2 emissions. You can find your car’s tax band and rate using the government’s online vehicle tax rates tool. Simply enter your vehicle’s details, and the website will display the applicable tax class and rate.

7. Are there any differences in car tax rules for Northern Ireland?

Car tax rules are generally the same across the UK, including Northern Ireland. However, there may be some minor differences in the administration of vehicle tax. For example, in Northern Ireland, you can tax your vehicle online, by phone, or at a Post Office, but you can’t apply by post. Make sure to check the specific requirements for your location.

8. How can I find my vehicle’s reference number for car tax?

When you tax your vehicle for the first time or renew your car tax online, you’ll need your vehicle’s 11-digit reference number. You can find this reference number on your vehicle’s V5C registration certificate (logbook) in section 1. If you’ve received a reminder letter for your road tax, the reference number will also be printed on the letter. Having your reference number handy will make the tax renewal process smoother.

9. Are there any additional fees for diesel cars or different vehicle types?

Yes, the type of vehicle you own can affect your car tax rate. Diesel cars often face higher tax rates compared to petrol vehicles, especially those registered after April 1, 2018. This is due to the higher level of emissions produced by diesel engines. Additionally, vehicles with a higher list price (over £40,000) are subject to an additional rate of £355 per year for the first five years (from the second year onwards). It’s essential to check the specific tax rates for your vehicle type and age to budget accordingly.