Car Tax For Beginners

It's important that you are aware of all the things associated with car tax.

Car tax, also known as road tax, is an annual fee that is required to be paid by motorists. Road tax can often be seen as misleading, as cyclists and horse riders - who also use the road - do not have to pay.

You can choose to pay for car tax in one payment annually, or you can split it up into two six-monthly payments or a monthly direct debit. If you opt to pay for it in one swoop, you will save yourself a little bit of money.

It's important to know about car tax when buying a car for the first time or switching to something new because it's an added fee that you should budget and take into account when thinking about your overall car costs.

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The type of car you have will also determine how much car tax you will be expected to pay, so knowing ahead of time the costs per vehicle type could be useful for you.

The money from the car tax you pay goes towards road maintenance and the improvements of motorways and other major roads. Some would argue that given the amount of potholes on our roads, this money does very little.

How is car tax calculated?

Car tax is calculated based on several factors, including when the car was first registered, how much CO2 emissions it produces, the type of fuel it requires, and its engine size.

You'll be able to determine how much emissions your car produces by looking at your V5C registration certificate. If you think you might be paying too much, you could contact the DVLA.

How much does car tax cost?

The cost of car tax varies per vehicle and on the numerous factors mentioned above. You can determine the cost of your vehicle's car tax by looking on the Government website and finding out what band your car falls under.

If your car was registered after April 1, 2017, your first-year car tax could range from as little as £0 per year to as much as £2,365; again, this is dependent on the type of vehicle you have.

Your costs will be £165 per year for a petrol or diesel car, though if you own a diesel car, you may be charged more than you would a petrol vehicle because they typically produce more emissions.

If your car was registered between March 1, 2001 and March 31, 2017, you will pay between £0 and £630 per year based on the car's fuel size and CO2 emissions.

If your car was registered pre-2001, you'll pay £180 per year if the engine is under 1549cc or £295 if it’s bigger.

If your vehicle was bought for more than £40,000, you will also face additional charges of £355 per year unless the car has zero emissions. All of these extra costs could determine the type of motor you opt to buy when looking for your next car.


Are any vehicles exempt from paying car tax?

While costs for most vehicles seem relatively high, some don't require you to pay any car tax. This could save you hundreds of pounds per year and help you determine which car you want to purchase if you're looking to get into something new.

However, even if you have a vehicle that doesn't need to pay car tax, you will still need to apply for it so that your car can be confirmed as illegible to pay the annual fees.

Electric vehicles - Provided that your source of electricity comes from an external source or battery.

Disability vehicles - You don't need to pay car tax if you have an electric scooter; if you drive a vehicle and are disabled, you may also be exempt. 

Classic cars - If your vehicle is older than 40, you will be exempt from paying car tax.

SORN vehicles - If you have declared your car off-road, you will not be expected to pay car tax. This is also called a Statutory Off-Road Notice (SORN), which you will have to apply for and ensure that it is not parked or driven on the road at any time.

Agriculture vehicles - If you drive a tractor or large lawn mower, you will be exempt from car tax.

What happens if I don't tax my car?

When your car tax is due, you will automatically receive a letter from the DVLA notifying you when it needs to be paid. If you don't pay it in time, you will receive a fixed penalty notice of £80, reduced to £40 if you pay it within five weeks.

If you choose not to pay it because you don't use your car, be sure to declare it as SORN, so you are exempt. If you fail to pay and are caught using your car, you could be fined £1,000 or five times the amount owed in tax - whichever is greater.

The DVLA has the means to discover untaxed vehicles, so if you choose not to pay, you will eventually be caught and induce a hefty fine, something that is not worth your time or money.

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What happens to your road tax when you sell your car?

If you are required to pay your annual car tax charge and then end up selling or buying a new vehicle shortly afterwards, you might wonder if you have to pay car tax twice.

Fortunately, you can claim a refund on car tax for any month you have not required the car tax on a particular car.

The slightly inconvenient thing is that car tax is not transferable from vehicle to vehicle, and that is due to cars having different criteria and factors that affect how much you're required to pay.

You can contact the DVLA online to let them know that the car you had purchased car tax for is no longer yours, and they will set about getting you a refund.


How to declare your vehicle off-road?

If you no longer use your vehicle but you still own and keep it, you can declare it off-road to avoid paying tax on it. You can reach out to the DVLA to obtain a SORN license by filling out a form.

How can I pay for my car tax?

You can pay for your car tax online via direct debit or in person at the post office. If you can't afford to pay the annual charge in one go, you can split this into two annual payments or monthly instalments.