Road tax, vehicle excise duty – whatever you call it, most cars can't be driven on the road without it. Not that such a detail deters some drivers from doing so.
In fact, following an overhaul of the road tax system in October 2014 when the familiar paper disc displayed in the windscreen was ditched, the number of untaxed vehicles on the roads trebled.
In November 2017, the Department for Transport admitted that in 2016-17, 1.8% of vehicles were being driven without road tax compared with 0.6% in 2013, the year before the system was changed. As a result, the government missed out on £107 million of revenue from 755,00 untaxed vehicles.
This drop in revenue is significant because from 2020 road tax will directly fund improvements to the road network, meaning motorists will suffer if levels of evasion continue to rise.
The changes to the road tax system were meant to reduce tax evasion and save £10m a year but motoring organisations said the new figures showed the changes had failed. They said more must be done to educate drivers about the road tax changes and urged the government to be tougher with evaders.
The DVLA countered that despite the rise in evasion, the bulk of motorists continue to pay their road tax. It also said that twice as many vehicles were clamped for unpaid tax than in the year before the changes to the road tax system were introduced.
Read on to find out all you need to know about road tax, from how to pay it, how much to pay and what happens if you ignore those reminder letters…
What’s happened to the road tax disc?
The most obvious change to the road tax system in October 2014 was the death of the paper tax disc. Discs are no longer produced so don't bother asking for one. At one stage, the last to be printed were selling for as much as £50 on eBay.
The tax disc served two purposes: the police and DVLA officials could see if a car was taxed or not, and it reminded owners when their road tax was due.
Now the DVLA uses automatic numberplate recognition cameras mounted on the sides of roads to spot unlicensed cars.
It writes to owners to remind them to tax their vehicle but if your post is mislaid or you are away from home for an extended period, you might not see the reminder.
Whose responsibility is it to tax the car?
It’s the owner’s. This might sound obvious but it really counts when you sell the car. Whereas under the old system, when you sold a car the next owner could benefit from any unused road tax, now the road tax lapses immediately.
The new owner must tax the vehicle before they can drive it on the road. The old keeper can apply for a refund of the unused tax (allow up to six weeks for a claim to be processed).
It’s this significant change in tax status which, say critics of the new system, explains the increase in unpaid road tax. As evidence they point to the fact that a third of untaxed vehicles had recently changed hands.
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How do I renew my car’s road tax?
You can pay at a Post Office that processes road tax applications (not all of them do). Remember to take the vehicle’s V5 logbook with you. You can renew by telephone (call 0300 123 4321), too. However, it’s easier to pay online at www.gov.uk/vehicle-tax, especially if the DVLA has sent you a reminder (form V11). As well as a card payment, you’ll also be able to pay by direct debit.
How do I tax a vehicle I’ve just bought?
Visit www.gov.uk/vehicle-tax and follow the steps before you drive the car away. You can tax it by telephone (call 0300 123 4321), too. Alternatively, if you don't need to drive the car immediately, take the green ‘new keeper’s details’ portion of the V5 given to you by the former keeper to a Post Office, remembering that you are not allowed to drive the car on the road until it is taxed.
What are the penalties if I don't tax my car?
A driver can be issued with a non-endorsable fixed penalty of £80, reduced to £40 if paid within 28 days. Failure to pay will result in prosecution and a possible fine of £1,000. You may also have to pay back-taxes and court costs. Depending on the circumstances, your car may be clamped. To release it you’ll need to pay £100 as well as purchase road tax.
How much does road tax cost for cars registered before 1 March 2001?
Rates are based on the size of the car’s engine with 1549cc or smaller paying £150 a year at 2017-18 rates, and larger than 1549cc, £245.
How much does road tax cost for cars registered between 1 March 2001 and 31 March 2017?
Road tax is calculated on a sliding scale based on CO2 exhaust emissions. For the tax year 2017-18, rates range from £0 for cars emitting less than 100g/km CO2 to £535 for those emitting more than 255g/km CO2. Many popular cars fall into the 101-110g/km CO2 and 111-120g/km CO2 tax brackets that attract rates of just £20 and £30 respectively. To find a car’s road tax rating, visit www.gov.uk/calculate-vehicle-tax-rates.
How much does road tax cost for cars registered from 1 April 2017?
Just as motorists were getting accustomed to the scrapping of the tax disc and the responsibility to tax a vehicle the second they buy it, the government changed the way road tax rates for cars registered from 1 April 2017 are calculated.
Now there are two things to consider: the first-year rate and the second-year rate (also called the ‘standard rate’). The first is a sliding scale still linked to CO2 emissions but only cars emitting no CO2 escape the tax. Cars in the popular 101-110g/km CO2 bracket pay £140, and those emitting 110-130g/km CO2, £160. The dirtiest, emitting more than 256g/km CO2, pay a whopping £2,000. Alternative fuel cars (electric or hybrid) pay £10 less at all increments.
In the second year of registration it’s all change, with the exception of those cars emitting no CO2 – they still pay nothing. All others pay £140, although again, alternative fuel cars (electric or hybrid) pay £10 less. However, there’s a nasty surprise for anyone whose car’s list price was more than £40,000. They pay an additional £310 each year for the next five years.
How did the November 2017 Budget affect road tax?
The £140 first-year road tax rate for petrol cars remained unchanged but the chancellor introduced a one-off tax increase for diesel cars registered from April 2018. It applies to models that don't meet the Real Driving Emissions Step 2 standards (all models won’t until 2021). It’s applied only in the first year of registration. The value of the surcharge is akin to the diesel car moving up into the next first-year road tax group, so one emitting from 110-130g/km CO2 and currently attracting a £160 charge, will pay £200.
How can I escape road tax?
Buy a zero-emissions vehicle such as a pure electric car or a car made before 1 January 1977 – neither vehicle attracts road tax. If you don't plan to use your car for an extended period, apply for a Statutory Off-road Notification (SORN) which exempts it from road tax as long as it is not driven on a public road. However, if you’re tempted to drive it on the road, you risk a maximum fine of £5,000. You can drive an untaxed car to an MOT test.