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What is car tax?

Most UK drivers must pay Vehicle Excise Duty or car tax to use the roads. But how much is it and are there any exemptions?

What is car tax for?

Quite simply, car tax is a legal requirement for most vehicles in the UK. If you're a UK motorist, it's likely you have to pay Vehicle Excise Duty (VED) or car tax. Unless your vehicle is exempt, it's one of the legal requirements for driving or parking your car on public roads, along with car insurance and an MOT certificate.

VED is sometimes called road tax, but that's a misleading term as other road users (like cyclists or horse riders) don't have to pay it. Your car tax goes into general government funds, which are used to pay for public services, including roads. So really, it's a tax on emissions, and a permit to use public roads in your car.

How much is your car tax?

If you have a zero emissions vehicle, like an electric car, you won't need to pay a penny. You will still need insurance, though, so find out more about how electric car insurance works.

There are other exemptions from vehicle tax, which we'll come to later on. For just about everyone else, your car tax rate depends on your vehicle's registration date. The simplest way to check your car's tax rate is to use the DLVA's vehicle enquiry service. You'll need your registration number, plus the 11-digit reference number from your vehicle's V5C document (also known as your car logbook).

You can also check the government's tax rates table or calculate the rate for new, unregistered vehicles. Here's our summary of how it works:

Cars registered from 1 April 2017:

For the first year, the rate is based on your car's CO₂ emissions. In subsequent years, you pay a flat rate based on fuel type, with petrol and diesel cars costing slightly more than hybrids or LPG.

Cars with a list price of more than £40,000 pay an additional sum for the first few years.

What tax band is your car?

The system was given a mini-update in April 2018. So, new diesel cars which don't comply with future RDE2 emissions levels will have to pay more in their first year.

Cars registered between April 2001 and March 2017:

All cars are banded from A (emissions below 100g/km) up to M (emissions above 255g/km). Again, petrol and diesel are more expensive than other forms of fuel.

Cars registered before April 2001:

Cars with engines up to 1549cc pay one rate, while those with bigger engines pay a higher amount.

Which vehicles are exempt from car tax?

We've mentioned already that you don't have to pay VED on electric (or other zero emissions) vehicles. Other exemptions include:

  • Historic vehicles registered before 1981
  • Vehicles used by disabled people
  • Agricultural vehicles that are mainly used off-road.

And if you're a visitor to the UK driving a car that's registered in another country, you can drive it here for six months before you need to switch registration and start paying tax.

Is your car taxed and does it have an MOT?

Up until 2014, it was easy to remember if you'd paid your VED: you'd have a tax disc displayed on your windscreen with the expiry date. These paper discs are long gone, but fortunately, there are other ways to find out.

It's easy to check online if your vehicle is taxed. Simply type in your registration number to the DVLA's website check. This will give you your current car tax, MOT and insurance status, plus other information about your vehicle.

It will also tell you when your car tax will run out, so you can avoid a fine for non payment.

Can you tax your car without insurance or an MOT?

You need a valid MOT (unless your car is exempt) and insurance to tax your car. You don't need your documents to hand, though. When paying for your tax online, your car's MOT and insurance status are checked automatically.

Plus, if you drive without an MOT or tax, it's likely that your car insurance won't be valid, so you wouldn't be covered if you had an accident.

How to tax your car

It's pretty simple to tax your vehicle online, over the phone, or at a post office.

You'll need a reference number from a recent reminder from the DVLA, your vehicle logbook, or your ‘new keeper' slip if you've just bought the car.

You can spread the cost by paying in monthly or six-monthly instalments, but you will have to pay a little bit extra to do this. Many people set up a Direct Debit. This is the easiest way to pay and makes sure you don't forget to make the payments.

You'll need to tax and insure your vehicle before you drive it away. So if you're buying a car, there's a bit of paperwork to complete before you can enjoy your new motor.

How to cancel car tax

You can get a refund on your car tax if you sell or transfer your car to someone else. It used to be that you could transfer the tax over to the new owner, but this is no longer the case.

If you stop driving or parking your vehicle on public roads, you'll need to make a Statutory Off-Road Notification (SORN) and apply for a tax rebate.

In the above circumstances, plus a few others, you can apply for a cancellation from the DVLA and get a refund for any full months left that you'd already paid for.

Cut the cost of motoring

Car tax is just one of the motoring costs you'll need to budget for throughout the year. To learn more about how to cut the cost of motoring, we've got more advice in our handy guides.

For car insurance and multi-car insurance at a price that's right, get a quote from Hastings Direct today. Our Premier and Direct policies are Defaqto five-star rated, offering you flexible levels of cover to suit your needs and your budget.

All information is correct at the time of publication. Hastings Direct cannot be held responsible for any misinformation displayed.

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