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A Guide To Car TaxBack

Car Tax, otherwise known as VED or road tax is one of the biggest yearly costs incurred with running a car. Since the government made significant changes to the way car tax is paid in October 2014, it is vital that buyers and car owners are fully aware of the changes and what is deemed necessary in order to stay on the right side of the law.

Trusted Dealers lays out the facts in simple terms below, to help motorists get to grips with all aspects of car tax.

Car Tax

The tax you pay on your car can be anything from nought to one thousand pounds depending on the CO2 emissions it releases. The more environmentally friendly a car is, the less you’ll pay. Car Tax must be paid on any vehicle registered in the UK that is driven and kept on a public road. If your vehicle is kept off-road, you must tax it or have a SORN (Statutory Off Road Notification)

Tax Discs

Since 1 October 2014, drivers were no longer required to display a tax disc. Instead, the DVLA (Driving and Vehicle Licensing Agency) and police use an electronic register to check whether people have paid their car tax or not.

One of the biggest changes to the system affects buyers purchasing a new or used car. Now, when you buy a vehicle, the car tax will no longer be transferred with the vehicle, so you MUST tax it before you use it. For more information on the recent changes to the tax disc, click here.

Tax on prospective cars

If you are considering purchasing a new or used car, there are now online tools which can show you how much tax you’ll pay. To find out the tax on any new or used car, click here.

Car Tax Exemption

There are a number of car owners that are exempt from paying any car tax, these include:

  • Owners of band A cars
  • Owners of a brand new car (in its first year of registration) in bands B to D
  • Drivers with a disability who receive the higher rate of the mobility component of Disability Living Allowance
  • Drivers who receive War Pensioner’s Mobility Supplement
  • Drivers with an invalid carriage
  • Cars that were made before 1 January 1974 (known as ‘historic vehicles’)

To find out more about other vehicles that may be exempt from tax, visit the GOV.UK website.

Car Tax charges from April 2015

The rate of tax you pay will depend on the car’s official CO2 emissions figures and the type of fuel it uses. The rates of pay are split into bands which are based on how many grams of Carbon dioxide (CO2) a car emits per kilometre driven. Below is a table outlining the different bands of car and the current rates you’ll pay.

Band CO2 emission (g/km) Total yearly cost First Year Rate
A Up to 100 £0.00 £0
B 101-110 £20.00 £0
C 111-120 £30.00 £0
D 121-130 £110.00 £0
E 131-140 £130.00 £130
F 141-150 £145.00 £145
G 151-165 £180.00 £180
H 166-175 £205.00 £295
I 176-185 £225.00 £350
J 186-200 £265.00 £490
K* 201-225 £290.00 £640
L 226-255 £490.00 £870
M Over 255 £505.00 £1,100


Alternative Fuel Car Tax

For alternative fuel cars, take £10 off each band. For example, if you car fits into Band B it will cost you £10 instead of £20 to tax your car, and so on.

How to pay your car tax

The cheapest way to pay for your vehicle’s VED licence is to pay a full 12 months up front. However, there is also the option to pay monthly or 6 monthly to help spread out the costs, but it will cost you more money to do this.  For more information about vehicle tax rates and how to pay your car tax, visit the website or to renew your car tax online click here.

Cars registered before 1 March 2001

If your car is a pre-2001 model, the tax rate will be based on engine size only. The rate for engines up to 1549cc is £145.00 and the rate for over 1549cc is £230.00. 

Car Tax Changes From April 2017 onwards

Car tax is set to change on new cars bought after April 2017. First year rates will be based on the carbon dioxide emissions of the vehicle. A standard rate of £140 will be issued for all cars except those emitting 0 g/km of CO2, for which the standard rate will be £0. Cars with a list price of more than £40,000 will have to pay a £310 supplement per year for the first five years.

Posted by Leana Kell on 27/01/2016