Beyond the initial expense of driving lessons, new drivers face a range of costs upon obtaining their license. Acquiring a vehicle, whether new or used, represents a significant outlay. Securing appropriate insurance coverage is another essential, yet costly, step. Additionally, vehicle tax adds to the financial burden, with its amount fluctuating based on the vehicle’s registration date, engine size, and CO2 emissions.
To help you understand this aspect of car ownership, we’ve created a comprehensive guide to vehicle tax. This guide will detail the calculation methods, monitoring processes, and the procedure for taxing your vehicle for the first time. Continue reading to gain a clear understanding of this essential requirement.
Understanding Vehicle Tax (VED)
Vehicle Tax, also known as Vehicle Excise Duty (VED), is a mandatory tax for those who drive and park vehicles on public roads. Contrary to the term “road tax,” the revenue generated is allocated across various sectors, including education, healthcare, and housing, not solely road maintenance.
Most vehicles operating on public roads are subject to VED. However, certain exemptions exist. Even when exempt, it’s crucial to apply for vehicle tax and provide the necessary documentation to validate the exemption.
Vehicle Tax Exemptions: A Comprehensive Guide
Certain vehicle owners may qualify for exemptions from paying vehicle tax. Here’s a breakdown of the categories:
Disability Exemption:
- Individuals receiving the higher mobility component of Disability Living Allowance (DLA), the enhanced rate mobility component of Personal Independence Payment (PIP), War Pensioners’ Mobility Supplement, or Armed Forces Independence Payment are eligible.
- The vehicle must be registered in the disabled person’s name.
Disabled Passenger Vehicle Exemption:
- Organizations providing transport for disabled individuals (excluding ambulances) can apply.
Historic Vehicle Exemption:
- Vehicles built before January 1, 1979, or first registered before January 8, 1979, are exempt.
Electric Vehicle Exemption:
- Electric vehicles powered by external sources or electric storage batteries are generally exempt.
- However, electric vehicles with a list price exceeding £40,000 and registered after March 2017 are subject to additional tax.
Mowing Machine Exemption:
- Vehicles designed solely for cutting grass are exempt.
Steam Vehicle Exemption:
- Steam-powered vehicles are exempt.
Agricultural, Horticultural, and Forestry Vehicle Exemption:
This category includes tractors, agricultural engines, light agricultural vehicles used off-road, and limited-use vehicles for short journeys between land owned by the same person.
Vehicle Excise Duty (VED) Explained
The amount of Vehicle Excise Duty (VED), or road tax, you pay depends on when your vehicle was first registered. It’s important to remember that the registration date refers to when the vehicle was first registered to a keeper, not necessarily when you purchased it.
1. Vehicles Registered Before 1 March 2001:
- VED is determined by engine size.
- Less than 1549cc: £160 (12 months), £168 (12 monthly Direct Debit), £88 (6 months), £84 (6 months Direct Debit)
- More than 1549cc: £265 (12 months), £278.25 (12 monthly Direct Debit), £145.75 (6 months), £139.13 (6 months Direct Debit)
2. Vehicles Registered Between 1 March 2001 and 31 March 2017:
- VED is based on fuel type and CO2 emissions, which can be found on your vehicle registration certificate or online.
- Tables are provided for Petrol/Diesel cars and Alternative Fuel cars, detailing VED rates based on CO2 emission bands.
3. Vehicles Registered From 1 April 2017:
- Alternative £455 (12 months), £477.75 (12 monthly Direct Debit), £250.25 (6 months), £238.88 (6 months Direct Debit)
- A first-year VED rate applies, determined by CO2 emissions. Diesel cars not meeting RDE2 standards incur a higher rate.
- Tables detailing first year payments, based on CO2 emissions, are provided.
- After the first year a fixed rate applies.
- Petrol or Diesel: £145 (12 months), £152.25 (12 monthly Direct Debit), £79.75 (6 months), £76.13 (6 months Direct Debit)
- Electric: £0
- Alternative Fuel: £135 (12 months), £141.75 (12 monthly Direct Debit), £74.25 (6 months), £70.88 (6 months Direct Debit)
- Vehicles with a list price exceeding £40,000 incur an additional £320 annual charge for 5 years.
- Petrol or diesel £465 (12 months), £488.25 (12 monthly Direct Debit), £255.75 (6 months), £244.13 (6 months Direct Debit)
- Electric £320 (12 months), £336 (12 monthly Direct Debit), £176 (6 months), £168 (6 months Direct Debit)
Vehicle Tax Monitoring: Modern Methods
Historically, drivers displayed paper tax discs to prove vehicle taxation, necessitating manual checks by the DVLA and police—a time-intensive process. To enhance efficiency and enforcement, the DVLA transitioned to a fully electronic database in October 2014, eliminating paper discs. This database records all taxed and untaxed vehicles.
Law enforcement now utilizes Automatic Number Plate Recognition (ANPR) cameras, cross-referencing data with the DVLA’s electronic database. This system allows for the swift identification of untaxed vehicles, mirroring the technology used to detect speeding offenses and other traffic violations.Vehicle Tax Monitoring: Modern Methods
Historically, drivers displayed paper tax discs to prove vehicle taxation, necessitating manual checks by the DVLA and police—a time-intensive process. To enhance efficiency and enforcement, the DVLA transitioned to a fully electronic database in October 2014, eliminating paper discs. This database records all taxed and untaxed vehicles.
Law enforcement now utilizes Automatic Number Plate Recognition (ANPR) cameras, cross-referencing data with the DVLA’s electronic database. This system allows for the swift identification of untaxed vehicles, mirroring the technology used to detect speeding offenses and other traffic violations.
Vehicle Tax Payment Information
Vehicle tax payment is required immediately upon car purchase. Previous owner’s tax payments do not transfer. Dealerships often assist with this process; however, you can easily manage it independently.
Payment options include 6 or 12-month periods. Upon payment, you will receive a reminder of the expiration date at the end of the chosen period.
Vehicle Tax Payment Options
Taxing your vehicle is straightforward. Begin by locating your vehicle reference number, found on your DVLA reminder (V11), vehicle log book, or new keeper slip. Once obtained, you can pay online via credit/debit card or Direct Debit.
For phone payments (excluding Direct Debit), contact the vehicle tax service at 0300 123 4321.
Alternatively, visit a Post Office that handles vehicle tax. Use the Post Office branch finder to confirm participation. Bring your payment or bank details for Direct Debit, along with your vehicle log book or new keeper slip for the reference number.
If you lack the reference number or required documents, apply for a new log book. To check your vehicle’s tax status, use the DVLA’s tax checker.
Managing Vehicle Costs
For infrequent vehicle users, costs like insurance, fuel, and tax can be significant. Vehicle tax discounts are unavailable unless you qualify for exemption. Consider car sharing to split costs, or apply for a Statutory Off Road Notification (SORN) to halt tax and insurance payments. Note that a SORN requires your vehicle to be stored off-road on private property.
Cancelling Your Vehicle Tax with the DVLA
The DVLA permits vehicle tax cancellation under specific circumstances, resulting in a refund for any full remaining months. These circumstances include:
- Vehicle sale or transfer
- Statutory Off Road Notification (SORN) application
- Vehicle write-off by insurance
- Vehicle scrapping
- Vehicle theft
- Vehicle export from the UK
- Vehicle tax exemption registration
Upon notification, the DVLA will cancel your tax and any Direct Debit payments, issuing a refund cheque for remaining full months.
Ensure your vehicle log book’s name and address are accurate before contacting the DVLA, as these details are used for refund delivery. Update your log book if necessary.
Note that credit card fees and surcharges on certain Direct Debit and single 6-month payments are non-refundable.
If your refund cheque is delayed beyond six weeks or has incorrect details, contact the DVLA or return it with correct details to:
Refund Section DVLA Swansea SA99 1AL.
