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29th June 2020

A guide to car tax

Car tax, or Vehicle Excise Duty, is something that like it or not, every vehicle owner within the UK is required to pay. Even when a vehicle’s car tax is £0, owners must still go through the process of taxing it.

Why we pay for car tax

Funds raised from car tax go into a central government fund, with a proportion of this fund used in order to improve roads, highway maintenance and ensure road user’s safety. Essentially road users are covering the cost of using roads throughout the UK.

Finding out how much car your tax is

A number of factors will determine which car tax band your car will be placed in and therefore how much car tax you will pay. The main factors are how ‘clean’ the Government deems the car to be in terms of pollution, whether it is a petrol, diesel or hybrid car, and the age of the car:

  • Cars over 40 years old are exempt from tax (despite the fact that these cars tend to be highly polluting).
  • Those registered before 2001, tax will be determined by engine size.
  • Cars registered between 2001 and 2017 are determined by their emissions.
  • From 2017, only the first year’s tax will be based on their emissions. From then on, they will pay a flat rate of £150 per year (£140 for alternative fuel cars and £0 for zero emissions cars).

If you’re unsure of which band your car would fall into, the Government has a handy tool for you to work it out.

If your car is currently off the road, you can SORN your vehicle. This allows you to forgo paying VED for the duration that your vehicle isn’t driven. As soon as you want to take your car back on the road, however, car tax must once again be paid.

The future of car tax

New fuel economy tests have come into force this year, which provide a much more accurate depiction of a car’s emissions than previous tests. This could put cars either into a more costly band or a cheaper band.

All cars that run purely on electrical power will continue to be exempt from VED; and whilst previously an additional £320 was required for electrical cars priced over £40,000, this has now been scrapped until 2025.

Wondering how to pay your car tax?

There are a number of ways to pay, by phone, at the post office or via an online form, which can be found here.

Keep up to date with the latest motoring news and guides on our Hints and Tips page.