Everything You Need To Know About Car Tax

All vehicles that are registered in the UK and are driven or kept on public roads must be taxed. Car Tax is officially known as Vehicle Excise Duty (VED) and it is sometimes referred to as road tax, although this is not strictly the same thing. VED is handled by the DVLA (Driver and Vehicle Licensing Agency) who use the money they collect on car tax each year to make improvements to the roads.

As of April 2017, new car tax rules came into effect and as of April 2018, a new rule for diesel cars was also brought in. The most recent changes to car tax were announced in The Autumn Budget of 2018/2019, which states that car tax rates for cars, vans and motorcycles will go up in accordance with RPI (Retail Price Index) from April 1st 2019.

This means that there are three different tax systems currently in use, so which one you are subject to, will depend on when your car was first registered. It is important to remember that in the case of used cars, the date on which it was registered is not always the same as the date on which you bought it.

How Car tax is calculated

All cars belong to tax bands and tax rates are determined by:

  • Engine size
  • Fuel type
  • Carbon dioxide emissions
  • The cars first registration date.

Car Tax rates for cars prior to April 2017

Cars first registered before March 2001 are part of a fairly straightforward tax system that splits vehicles into two classes of engine size – those under and those above 1549cc. This is because official data about carbon dioxide emissions generally was not available at this time so engine size was the best way to calculate rates, which are:

1549cc or below – £155 per year

Above 1549cc – £255 per year

Cars first registered between 1 March 2001 and 31 March 2017 are categorised by the volume of CO2 emissions they produce. Brand new cars are subject to what is known as the “showroom tax” in their first year, after which they will take on the standard rate, which are:

Car Tax Band CO2 Emissions First Year Rate Annual Rate After First Year
A Up to 100 g/km £0 £0
B 101 – 110 g/km £0 £20
C 111 – 120 g/km £0 £30
D 121 – 130 g/km £0 £120
E 131 – 140 g/km £130 £140
F 141 – 150 g/km £145 £155
G 151 – 165 g/km £185 £195
H 166 – 175 g/km £300 £230
I 176 – 185 g/km £355 £250
J 186 – 200 g/km £500 £290
K 201 – 225 g/km £650 £315
L 226 – 255 g/km £885 £540
M Over 225 g/km £1120 £555

 

The Car Tax Rules as of 2017/2018

All cars that were bought brand new on or anytime after April 1st 2017 are subject to the following conditions:

  • Low-emission cars are no longer exempt from car tax
  • A standard rate of £140 is applied to call cars excluding those with zero co2 emissions, which pay £0.
  • Cars costing over £40,000 will have to pay an additional £310 per year over five years, after which they will pay the standard rate depending on what type of fuel it uses.
  • The first year rate is based on the amount of Co2 emissions produced by your car (as of April 2018, these rates have increased). From the second year, standard rates apply.
  • Diesel cars first registered after April 1st 2018 that does not comply with the RDE Act 2 emission testing must pay a higher amount of tax in the first year.
  • Owners of “alternative fuel” cars, such as hybrids, plug-in hybrids, biofuel, compressed natural gas or liquefied petroleum gas will pay £10 less than petrol and diesel owners in the first year, after which they will pay £130 every year.
CO2 Emissions First Year Rate First Year Rate for Diesel Cars Standard Rate from 2nd Year
0 £0 £0 £140
1 – 50 g/km £10 £25 £140
51 – 75 g/km £25 £105 £140
76 – 90 g/km £105 £125 £140
91 – 100 g/km £125 £145 £140
101 – 110 g/km £145 £165 £140
111 – 130 g/km £165 £205 £140
131 – 150 g/km £205 £515 £140
151 – 170 g/km £515 £830 £140
171 – 190 g/km £830 £1240 £140
191 – 225 g/km £1240 £1760 £140
226 – 255 g/km £1760 £2070 £140
Over 255 g/km £2070 £2070 £140

 

Statutory Off Road Notification (SORN)

If your car is off the road, or you plan to take it off the road, you will be required to officially declare your car’s status to the authorities, or you will need to continue paying car tax, car insurance and have a valid MOT. To do this, you must apply for a Statutory Off Road Notification (SORN).

Once you have declared your car off the road with a SORN, you will not be able to drive or park it on a public road. It will have to be kept on private land such as your driveway or in a garage. The only exception to this rule is that you are allowed to drive it to a pre-booked MOT and you must be able to prove this is where you are going, should you get stopped by the police.

If your car is not taxed or insured and you have not declared it with a SORN, you can be fined £80.

If you have any outstanding tax or insurance, you can apply t the DVLA for a refund for the remaining months of tax or insurance.

If you have a SORN and would like to get your car back on the road, you must have valid car tax, insurance and an MOT before you drive it. Once you apply for car tax, your SORN is automatically voided by the DVLA.

Selling or Buying A Vehicle

When vehicles transfer hands through buying and selling, Vehicle Excise Duty does not automatically transfer with it.

Even if the car you bought still has a number of months left on its tax period, you must apply for car tax, as the new owner, before you can drive it.

If you are selling your vehicle and you have one or a number of full months left on its tax period, you are eligible for a refund for that additional time. The DVLA will automatically issue this to you, once they receive the selling or transferring a vehicle section of your V5C (your vehicle registration document) from you.

Similarly, if you buy a car that has been declared as SORN by its previous owner, you will have to apply for a new SORN from the DVLA, if you plan to keep it off the road, as you are its new owner.