A Short Guide to Car Tax

Car tax, also known as vehicle tax, is a mandatory annual tax paid by vehicle owners in the United Kingdom. It is a legal requirement to pay car tax to the government before driving on public roads. The government uses the revenue from car tax to maintain and improve the country’s road infrastructure and invest in other transportation initiatives. In this article, we will provide you with a comprehensive guide to car tax, including the latest updates from the UK government.

Types of car tax

There are three types of car tax in the UK: vehicle excise duty (VED), fuel duty, and congestion charge. VED is the most common type of car tax, and it varies depending on a vehicle’s CO2 emissions, fuel type, and age. Fuel duty is a tax on fuel purchases that helps fund road construction and maintenance in the UK. Congestion charge is a tax imposed on drivers who drive in London’s congestion zone during peak hours.

Vehicle excise duty (VED)

VED is the most common type of car tax in the UK, and it is calculated based on a vehicle’s CO2 emissions, fuel type, and age. The government has introduced new VED rates in the recent years to encourage drivers to move towards greener vehicles. Older cars with higher CO2 emissions are taxed more heavily than newer cars with lower emissions. Cars registered before March 2001 are taxed based on engine size, while cars registered after March 2001 are taxed based on CO2 emissions.

Over the years, the government has introduced varying rates of VED for vehicles based on their emission levels. Since April 2017, new rates have been introduced that apply to all new vehicles first registered on or after that date. These new rates of VED are based on the CO2 emissions of the vehicle. For zero-emissions cars, there is no VED to pay, while cars with emission levels above 90g/km are subject to higher rates.

For vehicles that do not meet Euro standards, a higher rate VED known as a tier four VED is payable. Currently, tiers 2 and 3 apply to cars registered on or after April 2017, while tier four VED applies to particular vehicles with specific fuel types that do not meet Euro standards. Owners of these vehicles may have to pay as high as £500 for the first year, followed by an annual VED of £140.

Fuel duty

Fuel duty is a tax on fuel purchases that is applied to both petrol and diesel cars. The tax helps fund road construction and maintenance in the UK, and it is charged in pence per litre. As of 2019, the fuel duty rate for petrol and diesel cars is 57.95p per litre.

In recent years, there has been a push for the UK government to increase the tax on diesel fuel to discourage drivers from using diesel vehicles. Diesel engines are known to emit harmful pollutants that contribute to air pollution, and the government is looking for ways to encourage a switch to cleaner vehicles. An increase in fuel duty could potentially discourage the use of diesel engines and encourage the switch to zero-emissions cars.

Congestion charge

London’s congestion charge is a tax imposed on drivers who drive in the congestion zone of London between certain hours. The charge aims to reduce traffic congestion and air pollution in the city center. The congestion charge applies from Monday to Friday between 7 am and 10 pm, and the current daily charge is £15. Drivers who fail to pay the charge are fined up to £160.

One can pay the congestion charge online, over the phone, or get an automatic payment account set up with Transport for London. The charge is only valid for a single day of travel and does not cover any additional charges like the ultra-low emission zone charge and so on.

How to pay car tax

Car tax can be paid using several methods, including online, phone, post, and in-person. The easiest and most convenient way to pay car tax is through the government’s online portal, which allows drivers to pay car tax securely and instantly. Drivers can also set up a direct debit with the Driver and Vehicle Licensing Agency (DVLA) to ensure their car tax payments are automatically deducted each year.

To pay car tax online, drivers will need their vehicle registration number, an MOT test certificate (if applicable), and a valid insurance certificate. Payment can be made using a credit or debit card, and the tax disc will be issued immediately for use.

Penalties for non-payment of car tax

Failure to pay car tax on time can result in hefty fines and penalties. Drivers who failed to pay their car tax on time are subject to fines of up to £1,000 and may face penalties like clamping and towing. The government has introduced stringent measures to crack down on car tax evasion, and drivers are advised to pay car tax on time to avoid penalties and fines.

Conclusion

Car tax is a mandatory annual tax paid by drivers in the UK to use public roads legally. The government uses the revenue generated from car tax to maintain and enhance the UK’s road infrastructure and invest in transportation initiatives. There are three types of car tax in the UK: VED, fuel duty, and congestion charge. VED is calculated based on the vehicle’s CO2 emissions, fuel type, and age, while fuel duty is a tax on fuel purchases that helps fund the road construction and maintenance in the UK. The congestion charge is a tax imposed on drivers who drive in London’s city center during certain hours. Drivers can pay car tax online or in-person, and failure to pay car tax on time can result in hefty fines and penalties. So, ensure to keep up with the latest updates and pay your car tax on time.

Car Tax

A car tax is one of the few taxes that are applied in most countries around the world, although the exact method a car tax is applied varies from country to country. Some charge a higher new car tax, while others do not distinguish a new car tax from and older car.

DVLA car tax

The DVLA car tax is also known as the Vehicle Excise Tax. The DVLA tax is collected by The Driver and Vehicle Licensing Agency (DVLA), which lends its name to the DVLA tax.

Tax disc

A tax disc is the method used in the United Kingdom to determine whether or not a tax disc holder has paid the most recent DVLA car tax in the United Kingdom. A tax disc holder is responsible for attaching a tax disc on the windscreen of each car they own.

Motor tax

The Republic of Ireland operates a website to allow individuals to pay their motor tax online. The ability to pay a motor tax online is provided by the Department of the Environment, Heritage, and Local Government.

Company car tax

The ability to pay company car tax online in the United Kingdom is provided by The Driver and Vehicle Licensing Agency.

Company car leasing

In most countries, company car leasing can provide tax benefits, because there can be lease tax benefits. Most of the company care leasing leas tax benefits are more beneficial to small businesses than large corporations.