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Guide to car tax

How to tax your car

Sarah Jacques
Written by  Sarah Jacques
5 min read
Updated: 17 Jun 2024

Taxing your car is a relatively straightforward process, but there are some things you’ll need to bear in mind. In our complete guide to taxing your car, you’ll discover how much it will cost, and whether you might be exempt based on the type of vehicle you have.

Key points

  • Vehicle Excise Duty (VED) varies based on vehicle type, fuel, and CO2 emissions, encouraging the adoption of eco-friendly vehicles

  • Car owners can tax their vehicles online via the DVLA's website, at a Post Office, or by phone, requiring documents like the V5C log book and valid MOT

  • Electric vehicles are exempt from VED, supporting environmental initiatives, while vehicles over £40,000 face a surcharge for five years post-first registration

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The cost of car tax, or road tax, or Vehicle Excise Duty (VED)

Vehicle Excise Duty (VED), commonly known as car tax or road tax, is a crucial financial obligation for car owners in the UK. This tax is essential for legally driving your vehicle on public roads.

The cost of VED can vary significantly. It is influenced by several factors including the type of vehicle, its fuel type, and CO2 emissions. Typically, cars with higher emissions face steeper VED charges. This system encourages drivers to choose more environmentally friendly vehicles.

It does so by financially penalising heavier polluters. For car owners, understanding these costs is vital. It affects the overall expense of owning and operating a vehicle. Additionally, the revenue generated from VED is used to fund transportation projects.

These projects can improve road infrastructure. Therefore, VED not only impacts individual budgets but also plays a role in shaping transportation policies and environmental strategies.

How can I tax my car?

To legally tax your vehicle, follow these essential steps. Here’s a straightforward guide to help you:

  1. Online process for taxing a car: Start by visiting the DVLA’s official website. You need your 16-digit reference number from your V11. Or use the 11-digit reference from your log book (V5C)

  2. Documents needed for car taxation: Have your log book (V5C) to prove vehicle ownership. A valid MOT certificate is required if your car is over three years old. Ensure your insurance covers at least third-party damage. If your vehicle is MOT exempt, have the relevant certificates

  3. Alternative methods if online access is unavailable: Tax your car at a Post Office that handles vehicle tax if internet is unavailable. Bring all necessary documents with you. Alternatively, call the DVLA to discuss other possible arrangements for taxing your vehicle

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Can I pay my car tax at my Post Office?

Yes, you can tax your car at your local Post Office. This option is convenient for many vehicle owners. The Post Office offers several services related to car taxation. When you visit, bring the necessary documents.

These include your vehicle log book (V5C), which proves your ownership. Also, bring a valid MOT certificate if your vehicle is over three years old. You must also provide proof of insurance.

Using Post Office services has several benefits. It is useful for those who prefer face-to-face transactions. It also helps those needing guidance through the process. Additionally, it is an excellent alternative for individuals uncomfortable with online services. This is also ideal for those without reliable internet access.

How much is my car tax?

Determining the cost of your car tax depends on various factors. The type of vehicle you drive is crucial. For instance, cars with lower emissions often enjoy reduced tax rates. This promotes environmentally friendly choices. Additionally, the vehicle's age affects the tax rate. The fuel type and the car's price also play a role. To find the specific car tax rate for your vehicle, visit the DVLA website. There, enter your vehicle's registration details. This process will tell you the exact amount you need to pay. For example, zero-emission vehicles might pay nothing. Meanwhile, newer diesel cars not meeting Euro 6 standards could face higher rates.

When is my car tax due?

Determining the due date for your car tax is crucial to avoid penalties. You can check this date by visiting the DVLA website. Enter your vehicle's registration number there. This will provide you with the specific date when your tax is due. It also gives other relevant details about your vehicle.

If you miss the car tax due date, you could face significant consequences. These include a fine. In some cases, your vehicle could be clamped or even impounded. It's essential to make the payment on time to avoid these penalties.

To ensure you never miss a payment, consider setting up reminders. You can do this through various apps. You can also use calendar systems on your phone or computer. Setting reminders a few weeks in advance can give you ample time. This helps you arrange payment and keep your vehicle legally on the road.

Which cars are exempt from paying road tax?

Identifying vehicles that qualify for a road tax exemption involves understanding specific criteria. Firstly, vehicles used by a disabled person might qualify for exemption. Additionally, electric vehicles (EVs) are also exempt from road tax, which supports environmental initiatives. Historic vehicles that are over 40 years old are exempt as well, acknowledging their classic status and less frequent use.

The list of exempt vehicle types includes:

  • Electric vehicles (zero emissions)

  • Vehicles used by disabled individuals

  • Historic vehicles over 40 years old

  • Mowing machines

  • Electric milk floats

To claim an exemption, the vehicle owner must apply through the DVLA. They must provide proof that their vehicle meets the exemption criteria. This process includes submitting specific forms. In some cases, evidence of the vehicle's status or usage is required. It's crucial to ensure all paperwork is accurately completed to avoid any delays or issues with the exemption.

Are electric cars exempt from road tax?

Many motorists wonder if electric vehicles (EVs) are exempt from road tax. Currently, electric cars registered in the UK do not pay road tax. This exemption supports the government's push for eco-friendly vehicles. It significantly lowers the cost of owning an EV.

The benefits of electric cars go beyond no road tax. Owners often enjoy lower running costs. They may also qualify for grants and subsidies. These perks enhance the financial appeal of electric cars. Additionally, electric vehicles typically have lower maintenance costs than petrol or diesel cars.

Looking forward, the tax landscape for electric vehicles may change. As more electric vehicles hit the roads, government policies might adjust. It is vital for potential and current EV owners to stay updated on tax changes. Understanding these changes helps grasp the financial aspects of owning an EV.

Vehicles with a list price of more than £40,000

When you own a vehicle with a list price exceeding £40,000, additional tax implications arise. Firstly, a surcharge is applied to these more costly vehicles. This extra fee is effective for five years starting from the second year of registration. To calculate the total tax for such vehicles, combine the standard rate with the surcharge. It's wise to use the latest tax rate tables provided by the government for accuracy.

How do I cancel my car tax for a refund?

Cancelling your car tax and securing a refund involves a few straightforward steps. Firstly, you must notify the DVLA when you no longer own the vehicle. This is also necessary if it's taken off the road, as in the case of a SORN (Statutory Off Road Notification). This notification is crucial as it triggers the cancellation of your vehicle tax.

To be eligible for a refund, your car tax must have been paid in advance. Refunds are typically processed automatically. This happens when you inform the DVLA that you've sold the car. It also occurs if you've transferred it to a new owner, or declared it off the road. It's important to ensure that the DVLA's records are up-to-date to avoid delays.

The amount refunded will correspond to any full months left on your car tax. The DVLA calculates this by checking the remaining period of your vehicle tax from the date they receive your notification. Remember, the refund is sent as a cheque to the address on file. Thus, keeping your contact details current with the DVLA is essential.

Can I pay my car tax monthly?

Yes, you can opt to pay your car tax on a monthly basis. This flexibility is possible by setting up a Direct Debit with the DVLA. When you choose this method, payments are deducted from your bank account each month. This ensures compliance without the need to remember manual payments.

Opting for monthly payments offers several advantages. Firstly, it spreads the cost over the year, easing the financial burden. However, it's important to note that this convenience comes at a slight premium. There is a small surcharge added to the total annual cost when you pay monthly.

Does car tax renew automatically?

Understanding the renewal process for car tax is crucial for vehicle owners. Car tax can renew automatically under specific conditions. If you have previously set up a Direct Debit, the DVLA will usually renew your vehicle tax annually or six-monthly.

This depends on your chosen frequency. To either opt in or out of this automatic renewal, you must manage your preferences. This can be done through the DVLA website or during the initial tax setup.

Should your circumstances change, such as a change in vehicle ownership or a modification in vehicle tax exemption status, it's important to update your details. Ensure your car tax information remains accurate by updating with the DVLA promptly.

What happens if I drive without tax?

Driving without car tax carries significant penalties. If you're caught, you could face a hefty fine. The initial penalty is a £80 fine. This can be halved if paid within 28 days. However, if the issue escalates, you might end up in court.

The fine could then soar up to £1,000. Besides financial penalties, your vehicle could be clamped. It could even be impounded

The legal implications of driving without car tax are severe. It's considered non-compliance with the Vehicle Excise and Registration Act. This means you're not just facing fines. You could also face legal proceedings.

Your vehicle's details could be endorsed on a public database. This database is accessible by police and other enforcement agencies. Any further breaches are more likely to be caught.

If you realise your car tax has lapsed by accident, act swiftly to rectify the situation. The first step is to renew your tax immediately. You can do this online or at a Post Office. It's advisable to keep evidence of this renewal.

This helps avoid penalties if stopped by the police before your records are updated. Additionally, if you receive a penalty notice, you might be able to appeal. Provide proof that you've now taxed the vehicle and explain the oversight.