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Car Tax Explained

Car Tax Explained


Car tax is an essential aspect that every car owner has to account for because it’s a legal requirement in most countries to pay it. Car tax acts as a levy that is used by the government to fund road maintenance and other road improvement initiatives. It’s collected annually, and every car owner must pay it. The car tax amount paid usually depends on the car’s age, its CO2 emissions level, and its type of fuel. In this article, we will delve deeper into car tax, breaking down what it is, how it’s calculated, and the current laws around car tax.

What is Car Tax, and How is it Calculated?

Car tax, commonly known as Vehicle Excise Duty is a tax that is collected by the government on cars that are driven on public roads. The amount of car tax paid by every car owner is dependent on some factors. These factors differ in different countries. However, the most common factors include the age of the car, engine size, fuel type, and carbon dioxide emissions.

In the UK, Car tax on cars registered before April 2017 is calculated by using the car’s engine size and carbon dioxide emissions. Cars registered after April 2017 have been subjected to higher tax rates, with the tax depending solely on their carbon dioxide emissions. This means the more CO2 emissions a car generates, the more the tax the owner has to foot.

Besides the age and CO2 emissions levels, electric cars may be tax-free for the first year on the road. However, it’s not a guarantee that the owner will receive the same exemption in the following years. If he/she owns a car worth more than £40,000, the owner is required to pay the supplement of car tax (as well as the standard rate) for five years.

Car Tax Laws in the UK

Car tax laws in the UK have undergone numerous changes over the years. One of the significant changes came in April 2017. Before this date, car tax depended heavily on the engine size of the car. However, after April 2017, changes in the law means that the car tax paid on all cars was determined by the amount of emissions (CO2) the car produced. The law came with several benefits that could mitigate the damage caused to the environment by cars with too much CO2 emissions.

In 2020, the UK government announced a significant change that could significantly impact electric cars’ sale. To motivate the public not to use petrol and diesel cars, the government proposed that their sale is banned from 2035. This cut-off date was initially supposed to be 2040, but the rapid climate changes motivated the government to push the date forward by 5 years.

Furthermore, in the UK, the government usually reviews car tax rates annually. Any adjustments made by the government usually affect the tax that every car owner will pay the following year. Therefore, it’s essential to keep up with the current laws to know what amount of tax is required and when.

In 2020, the government announced that they would introduce changes aimed at adjusting the car tax rates for low-emission vehicles to enhance their affordability. The new changes proposed an increase in the rate of tax liability for zero-emission cars worth over £40,000. Still, the owners of low emission cars would see a drop in tax liability, setting a new rate at £0.

Penalties for Non-payment of Car Tax

In the UK, anyone caught driving without car tax faces an automatic fine of up to £120. The penalty can increase up to £1000 if the car owner persists in not paying their car tax. In addition to these fines, the government may clamp the car or even confiscate it.

The owner must settle any debt they may have, including any penalty fees, before they can retrieve their car. The government uses the fines collected from people driving without paying car tax to manage roads and improve road infrastructure.


In essence, car tax plays a vital role in improving road infrastructure and maintenance. Every car owner must keep up with the current laws to avoid unnecessary penalization. Governments across the globe continue to review their policies and regulations to ensure that they control carbon emissions, mitigate environmental damage, and promote road safety. As the world shifts towards cleaner, safer, and greener future in terms of transport, the car tax laws will also have to adapt to the changes. However, it’s crucial to keep in mind that the taxes we pay should directly benefit society and the environment.

What is a Car Tax?

In 2008, the United Kingdom’s government implemented a taxation system that was fashioned in order to regulate and authenticate any or all motor vehicles that operate a carbon dioxide-based (CO2) mechanical system; this is oftentimes referred to as the ‘car tax’. Vehicles that utilize a combustion engine that utilized gasoline in order to operate will also contribute to the emission of carbon dioxide contingent on the vehicle’s engine and ecological impact.

The Car Tax was instated in order to promote a more ecologically-friendly and conscious transportation protocol with regard to motor vehicles and their respective carbon footprint; as a result, the United Kingdom’s regulated Car Tax requires its citizens to submit monetary payment in accordance with their respective vehicles environmental viability. This Car Tax is mandated by the Driving and Vehicle Licensing Agency (DVLA) – the DVLA is the administrative organization responsible for the regulation, oversight, and authentication of all motor vehicles and licensed drivers authorized to drive within the United Kingdom.

Vehicles Subject to the Car Tax

In the event that an individual citizen of the United Kingdom owns a registered vehicle that is not being used, they may still be required to pay Car Tax in conjunction with that vehicle; this can take place even in circumstances of long-term storage of a vehicle or lack of usage. However, in the event that an individual applies for a Statutory Off-Road Notification (SORN), that individual will not be required to submit any Car Tax payment with regard to that vehicle.

What is a Car Tax Disc?

Upon the satisfaction of a Car Tax payment, that individual driver will receive a disc, which must be displayed in the windshield of the vehicle in question and viewable by law enforcement agents:

•    The Car Tax is monitored by both Law Enforcement, as well as the DVLA; individuals failing to display proper registration may be subject to fines in the event that the Car Tax has been satisfied with regard to that specific vehicle

•    Drivers failing to satisfy car tax payments – thus lacking Car Tax discs – maybe subject to the placement of immobilizing device on the tire, which may require a fine in the fee is not paid; in the event that a car tax payment is not satisfied subsequent to a ‘clamping’, the vehicle may be destroyed within 7-days of the failure to make a car tax payment

Car Tax Controversy

In certain debates, the car tax has been referred to as a regressive tax within its latent methodology. Opponents of the car tax maintain that individuals who exist in a lowered-income bracket may not be able to afford a newer model vehicle more succinct with environmental and ecological standards; as a result, that individual may be subject to bear the burden of the car tax. Conversely, more wealthy individuals may be able to purchase newer models of vehicles in compliance with the car tax, thus providing them relief of heavier car tax payments.