Road tax explained

Road tax is an irritating yet necessary expense each year. It is important to keep up-to-date with prices and keep on top of your road tax or your car could be clamped and cause a major inconvenience to you!

Road tax in the UK

If you are from the UK, you may associate road tax with the small round disks that used to be stuck to the windscreen. However, if you take a closer look at a car today, you’ll notice that it probably no longer has one. This is because the process has become automated. Since 2014, enforcers rely on number plate recognition to check the tax status of a vehicle. This system is cheaper to run and possibly more convenient to you.

Why do I need to pay for road tax?

You should pay road tax if your car it is in use on public roads. If you only use your vehicle on private land, you will need an exemption though shouldn’t have to pay road tax. Electric and hybrid cars are both eligible for discounts due to their reduced fuel emissions. Cars over 40 years are exempt from road tax and there are other ways in which you can apply for a reduction. This also applies to classics.

As a general rule, the lower the CO2 emission count, the less you will be charged. Again, this is dependent on the size and value of your vehicle.

Even if you know the sum to pay will be zero, you still have to apply for road tax on the GOV website. If you are an exempt driver, it is important that you go through the process of applying in case something has changed. If the DVLA find an untaxed car on the roads, they will clamp your wheels so you are unable to drive. This can be a major inconvenience so is best prevented at all costs! To check if you vehicle is taxed, check the gov.website.
If your car is worth over £40,000, you will be expected to pay an additional £355 for 5 years. However, if your vehicle is fully electric, you will be exempt from this payment.

What about road tax for other vehicles?

Road tax for a motorbike or moped will be a completely different story. Due to their reduced size and consequent emissions, you will have to pay less. This is certainly worth considering when choosing what vehicle to buy.
When buying or updating your road tax, there are a few things you should have with you. Your driver’s log book contains a unique reference which you will need. This can also be found in the vehicle’s green book if it is new.

Different rules apply to vans and pickup trucks. Light commercial vehicle road tax will be applicable to these such vehicles. Be sure to check out the government website for more details.

Will the annual sum change from year to year?

It is important to note that your road tax will differ from year 1 to year 2. You will be offered a reduced rate for the first year your car is on the road and then it will increase. Again, the extent of this increase is entirely dependent on the worth and CO2 your car produces. If your vehicle does not emit CO2, you will be exempt entirely. From here, the more emissions produced, the higher the tax will be.

The standard second year rate will be around £155, with a £10 reduction for cars emitting less fumes. This only applies for cars worth under £40,000.

This system of road tax has been in place since 2001. The UK government decided to base road tax on emission in a bid to reduce pollution, particularly in urban areas.

Should I pay in installments?

As we have mentioned before in our blog posts, paying monthly will make your overall charge more expensive. Paying bi-annually is more expensive again. The cheapest option is paying for the expense in one chunk. This way you’ll avoid paying 5-10% in interest each year. By paying through direct debit, you will not need to remember to update your tax each year. The DVLA will continue to take payments until you inform them of a change. This could be the sale of a car or changes to your exemptions.

Overall, road tax is something you’ll need for each car you use or keep on a public road. Though you are no longer required to display the small disc, authorities can still punish you for not having the right tax. Authorities will identify you  through number plate recognition which can lead to clamping and fines. If paying through Direct Debit, the DVLA should take payments each year with no need for you to continually update payments. This reduces the hassle of payment. If you have any queries, check the government or post office website for more information.