In the UK, owning a vehicle comes with the responsibility of paying vehicle excise duty (VED), commonly referred to as car or road tax. This duty varies based on several factors including the vehicle’s age, engine size, fuel type, and emissions. Here’s a breakdown of what you need to know to determine your car tax.
Who Needs to Pay Car Tax?
The registered keeper of the vehicle is responsible for paying the excise duty or must declare the vehicle off-road with a Statutory Off Road Notification (SORN) to the DVLA.
Determining Your Car Tax
- Vehicles Registered Before March 1, 2001: Tax is based on engine size.
- Vehicles Registered After March 1, 2001: Tax is calculated based on the vehicle’s CO2 emissions and fuel type.
With the tax system being regularly updated, including a revision in April 2020 incorporating the worldwide harmonised light vehicle test protocol, it’s essential to stay informed of the latest rates.
First-Year Tax Rates
For new vehicles, the first-year tax is often included in the vehicle’s price. This rate is determined by the car’s CO2 emissions, with diesel cars being charged more unless they meet the RDE2 standards. From January 2021, all new cars must undergo this emissions testing.
Subsequent Years’ Tax Rates
After the first year, the tax rate simplifies to a standard rate, currently £150 for most vehicles, with a reduction available for hybrid vehicles. Cars costing over £40,000 incur an additional £325 supplement for five years starting from the second tax payment.
Different Tax Bands
For cars registered between March 1, 2001, and March 31, 2017, the tax is based on 13 CO2 emission bands, with a maximum annual cost of £580 for the highest emitters. Vehicles registered before March 1, 2001, have a simpler system based on engine size, costing up to £270 annually for engines larger than 1549 cc.
Checking and Paying Car Tax
Vehicle tax status can be checked online using the car’s registration number. Tax can be paid via direct debit or credit/debit card, requiring the vehicle’s logbook (V5C) or a reminder letter (V11) from the DVLA.
Revenue from Car Tax
The Department for Transport reported 44.4 million vehicles registered in the UK in 2019, with VED contributing £6.4 billion to the government. This is in addition to nearly £28 billion from fuel tax.
Allocation of Car Tax Funds
Traditionally, VED revenues went into the Consolidated Fund for general expenditure. However, the government now earmarks a portion for road improvement projects in England.
Exemptions from Car Tax
Few are exempt from paying car tax, including disabled individuals, historic vehicles, and fully electric cars due to their zero emissions.
In summary, calculating your car tax involves understanding the specific details of your vehicle and staying up to date with the current taxation rates and exemptions. For precise information, visiting the government’s official website is recommended.
