How To Tax A Car: The Online Car Tax Guide

Car tax or road tax, also known as vehicle excise duty (VED), needs to be paid for every car registered in the UK.

Car tax is due regardless of whether your car is being driven regularly or parked up unused on a public road. Vehicles kept off public roads will need to be taxed or have a SORN (Statutory Off Road Notification).

car tax guide
Navigating the car tax system can be a painstaking task.

Car tax explained:

Getting your head around VED and navigating the DVLA website can be a painstaking task – especially if you’re strapped for time.

That is exactly why we have put together this ultimate guide to car tax – to help you make sense of all the intricacies of the vehicle tax system in the UK and hopefully save you some time and money.

What is the DVLA and VED?

DVLA office
The DVLA offices in Swansea

DVLA stands for ‘Driver and Vehicle Licensing Agency’. To drive in the UK you must be registered and licensed with the DVLA.

The DVLA is a government-run organisation responsible for collecting vehicle excise duty (VED) and it therefore keeps a database of the registration and licensing status of every driver and car on UK roads.

The DVLA is the body that will issue driving licences and registration certificates. They will also record driver endorsements e.g. points on your licence and any consequent disqualifications.

They are also the body with overall responsibility for collecting car tax and taking action against vehicle tax evaders.

How much car tax should I pay? Car tax bands and rates explained.

How much tax you will pay every year depends on which VED (vehicle excise duty) band your vehicle falls into. The UK government has targets it needs to hit with regard to climate change and emissions, so the VED bands are largely rates based on your vehicle’s CO2 emissions.

There are different rates of tax depending on when your car was first registered. Just skip to the section your vehicle falls under by clicking on one of the options below. The bands are as follows [as of November 2017]:

  • Car was first registered on or after 1st April 2017
  • Car was first registered between 1st March 2001 and 31st March 2017
  • Car was first registered before 1st March 2001

How much tax should I pay if my vehicle was first registered on or after 1st April 2017?

For cars first registered on or after April 2017 the cost of your first payment is dependant on your vehicles CO2 emissions. However, when it comes to renewing your annual car tax there will simply be a flat rate that is dependant on the fuel type of your vehicle, regardless of the CO2 emissions.

How much tax do I pay?
Vehicles with a list price of more than £40,000 pay an additional £310 a year in tax!

Vehicles with a list price of more than £40,000 (the advertised price before any discounts) will have to pay an additional £310 a year in VED. You will need to pay this rate for 5 years, starting from the second time the vehicle is taxed.

Some alternative fuel vehicles, typically electric vehicles, require no tax whatsoever to be paid (those with CO2 emissions of less than 50g/km and costing less than £40,000 to be more specific).

Those with emissions over 50g/km will only have to pay tax in the first year – after that it’s totally free!

The chart below from the government’s website will show you the first year rate for your vehicle.

NOTE: If you would like to check rates and find out which band your vehicle is in, just skip to how to use Parker’s car tax checker to check how much tax to pay.

First year tax rates for vehicles by emissions and fuel type (cars registered on or after 1st April 2017 only):

First Tax Payment

After the first 12 months of tax your rate will be flat for each further year. This rate will depend on the fuel type of your vehicle, regardless of its CO2 emissions. Alternative fuel vehicles include hybrids, bioethanol and liquid petroleum gas. See the table below to find your second tax rate.

Car tax rates for second tax payments onwards (cars registered on or after 1st April 2017 only):

Rates for second tax payment onwards

How much tax will I pay if my vehicle was registered between 1st March 2001 and 31st March 2017?

If your car was first registered between 1st March 2001 and 31st March 2017 then it will fall under the old tax bands. The amount you will pay is based on the CO2 emissions your vehicle produces.

Petrol car diesel car march 2001 tax rates

What if my car was first registered before 1st March 2001?

If your car was first registered before 1st March 2001 then the tax rate is based simply on engine size. There are only two tiers for cars first registered before this date.

The rate for engines up to 1549cc is £145.00 per year. The rate for engine sizes over 1549cc is £235.00 per year.

NOTE: The car tax disk is dead! Since October 1st 2014 you are no longer required to display a tax disc. The DVLA now use their database to check who has paid and who has not.

car tax disk
The old car tax disk, now replaced by a digital record system.

Is my vehicle exempt from car tax?

Some owners don’t have to pay any tax e.g. owners of certain electric cars like the BMW i3, those with disabilities may also be exempt from vehicle tax and cars made before January 1st 1974 are exempt too. These are known as ‘historic vehicles’.

Car Tax Checker – How do I use Parkers car tax checker to check how much tax to pay on my car?

If you’re as lost as most people are when trying to find out how much CO2 emissions a car produces/its engine size don’t fear! Parker’s car tax checker is here. This handy car tax calculator tool will help you check how much tax you’ll need to pay on your own car or that shiny new motor you’ve been eyeing up.

Step 1: Visit Parker’s Car Tax Checker page

Head to Parker’s website and car tax checker page and choose the details that match the car you are interested in from the table, then calculate your car tax!

We’ve gone for the Ford Focus Hatchback (05-11 models) in this example below:

parkers car tax checker 1

Step 2: Find your vehicle

Click on ‘Go’ and a table similar to the below will appear:

parkers car tax checker 2

The table includes lots of relevant information like annual, six-monthly and first year road tax rates as well as the different levels of CO2 emissions for each model variation.

The first year rate is shown as ‘N/A’ for all of these models, as the 2005-2011 Ford Focus is clearly no longer available to buy new, so the first year rate would have already been paid by the first owner.

If you were to choose a new vehicle then you would see a different rate for the first year in some cases.

You can see a new Ford Focus Hatchback RS 2.3 EcoBoost equivalent below:

What were the car tax changes in 2017?

On April 1st 2017 the new VED (car tax) rules were put into practice.

In order for the UK government to hit its targets on fighting climate change and the levels of CO2 in our atmosphere, taxes were broadly increased on high emission vehicles.

Before the new VED bands were introduced in April 2017, the tax on a car with CO2 emissions over 255g/km was £550 for the first year. With the new rates that same vehicle would now set you back £2,000 in the first year.

That’s a 263% increase! However, with the old bands, you would continue to pay a rate based on your vehicle’s emissions year on year.

With the new rates (announced in November 2017), you pay a flat rate of a maximum of £147 a year after the first year of tax. This amount is the same for every diesel/petrol vehicle, no matter how much CO2 emissions that car produces.

Because of this, it is actually possible to pay less tax in the long term on a high emissions vehicle than it was under the old rules!

The new rules are intended to put people off the initial purchasing of a high emissions vehicle by slapping you with a high first year tax payment.

london traffic 1

What were the car tax changes in 2018?

The attack on diesel owners and buyers continued with the Chancellor Philip Hammond’s Autumn budget in 2018. In it, he announced that potential buyers of new diesel cars would be hit with additional costs for taxing their vehicle. Used diesel prices have been falling as a result but recently bounced back. We look at the pros and cons of buying and selling a diesel car in this guide.

From April 1st 2018, new diesel vehicles may be subject to move one band above their original band if they don’t meet the latest Euro 6 emissions standards in the RDE2 ‘real world’ tests.

This test measures the amount of NOx emissions a vehicle produces under ‘real-world’ driving conditions. Currently a limit of 80mg/km has been set but the government has allowed for a compliance factor of 1.5 times.

This makes the current limit 140mg/km. If a diesel vehicle breaches this upper limit, its first year tax rate will be pushed up a band.

It is estimated that this change will affect around two million cars with high emission engines. Cars such as SUVs and sports models may end up paying up to £500 more in first year rates.

Smaller diesel vehicles like the Ford Fiesta can expect an additional £20 added onto to first year rates. See our custom table below for more information:

2018 VED diesel changes

 

How do I pay car tax at the Post Office, online or by phone?

In this section of the guide will cover the various ways in which you can pay or renew your car tax. For any of these methods you will need at least one of the following to hand:

  • V11 letter from the DVLA (this should be sent to you around a month before your VED due date).
  • V5C log bookthe V5, your vehicle’s log book. This must be in your name.
  • V5C/2 – the new keeper’s details slip. This would have come from the previous owner’s log book if you recently bought the car.
  • V85/1 – if it’s a Heavy Good Vehicle (HGV)

If you don’t have any of these documents then you will need to apply for a new V5C. To do this, you’ll need to fill out a V62 form. You can pick one of these up from your local Post Office. The cost is £25.

Your car will also have to have a valid MOT (this has to be valid from the date your vehicle tax starts or the date your vehicle tax is issued. Whichever is latest).

There are a number of ways to pay your car tax with the DVLA. Just scroll to the section relevant to you.

How do I pay car tax online?

Step 1: Go to the Government’s vehicle tax service website

Head to the Government’s vehicle tax service here and click on ‘Start now’.

V11 reminder

Step 2: Select whether you have your V11

You will be taken to a page that asks whether you have your V11 to hand. Select ‘Yes’ or ‘No’ and continue.

I have the V5CStep 3:  Enter your vehicle’s registration number and 11 digit reference

In our example case, we don’t have a V11 to hand but we do have a V5C so we’ll select that option at the next step. Once you click Continue you’ll be taken through to the page below.

Enter your vehicle’s registration number and 11 digit reference. The 11 digit reference can be found at the bottom of your V5C document on the inside. It should say ‘Doc . Ref . No’ followed by your unique 11-digit number.

Enter vehicle reg

Step 4: Check and confirm your details

You will then be asked to check and confirm the details you have provided. In this example, the vehicle’s tax expired back in Jan 2011. It has been declared off road with via SORN (statutory off road notice) so tax was no longer required. Now if the car is going back on the road it needs to be taxed.

Check vehicle details

Step 5: Choose whether to pay your car tax annually or monthly

After clicking continue, you will be given the option to choose whether to pay your VED monthly or annually. Paying annually will always be cheaper. You will also be asked whether you want to pay by credit/debit card or setup a direct debit (if you want your car tax payment to come out of your account automatically every year).

How do I Pay car tax by phone?

If you would like the pay your car tax by phone you can simply call the DVLA’s vehicle tax service on 0300 1234 321. It is a 24 hour service but note it may cost you up to 10p per minute on a landline and from 3p-40p from your mobile. Always check with your provider.

Before the call make sure you have at least one of the forms mentioned at the start of this section (V11, V5C or V5C/2) and your car’s VRM (vehicle registration mark) to hand.

You can pay by debit or credit card over the phone but you won’t be able to setup a direct debit. You will need to do this online or in the Post Office.

How do I pay car tax at the Post Office?

How do I pay tax at the Post Office?

Many people prefer to do things the old fashioned way and pay their VED at their local Post Office. You will need to bring at least one of the forms mentioned at the start of this section (V11, V5C or V5C/2) with you.

Simply head to your local branch with one of these forms and a member of staff will be able to help. When it comes to paying, you’ve got plenty of options. The Post Office accepts:

  • Direct Debit
  • Cheque payable to Post Office Limited
  • Debit Card
  • Cash (excluding by post)
  • Post Office Budget Card
  • Postal Order
  • Sterling travellers cheques
  • Credit Card (£2.50 handling fee)

How do I cancel my car tax and get a tax refund?

You could be eligible for a car tax refund if your car has been sold, taken off road, written off, scrapped, stolen, registered exempt or exported out of the UK.

You can inform the DVLA about any of the above by calling: 0300 123 4321 to cancel your car tax.

Once you have informed the DVLA, your vehicle tax will be cancelled. If you paid by direct debit, the payment will be stopped and you will get a refund automatically.

Your refund will be posted to you as a cheque for any full months left on your vehicle tax.

The amount is calculated from the date the DVLA receives your information so remember to alert them immediately of any changes.

How do I get a tax refund when I sell or declare my vehicle off road (SORN)?

If you sell your car , whether privately, to an online car buyer or to a dealer and there’s still outstanding tax on it, you’ll be due a refund from the DVLA.

This should happen automatically as when you sell your car as when selling you fill out your V5/VC5 with the new owners details.

This informs the DVLA you are no longer responsible for the tax on that particular vehicle. This will also happen automatically when you register your vehicle as off the road (SORN).

Any months remaining on your car tax will be be refunded. A cheque will be sent in the post addressed to the name and address on the vehicle’s V5C document. It should arrive in the post after 6 weeks.

Again, make sure to notify the DVLA as soon as possible after you sell your car to avoid losing any due money.

How do I get a tax refund when my vehicle has been written off?

Writing off a vehicle is essentially selling your vehicle to your insurance company and just the same as when you sell your vehicle, you could be due a car tax refund if there is any remaining tax on it.

If you’re vehicle has been written off, you will need to inform the DVLA in order to get your refund. You can tell the DVLA here. You will be refunded by cheque and this should arrive in the post after 6 weeks.

How do I get a tax refund when my car has been stolen?

If your vehicle has been stolen and the insurance has paid out, you will be due a tax refund if your car tax isn’t due for renewal. To get your refund you will need to tell the DVLA that the car has been stolen and the insurance has paid out. You can do this here. You will be refunded by cheque. This should arrive in the post after 6 weeks.

How do I get a tax refund when exporting my vehicle?

If you are moving out of the country or taking your vehicle out of the country for more than 12 months (known as a permanent export) you will need to inform the DVLA before getting your tax refund. You can find out how to do that here.

You will need to fill out the V5C/4 page of you V5C logbook and send it back to the DVLA (address below).

DVLA,
Swansea,
United Kingdom
SA99 1BD 

Include with a letter stating your new address. You will be refunded by cheque. This should arrive to your new address in the post after 6 weeks.

car tax and taking your car abroad
Shipping a car offshore? It’s worth checking your car’s tax status in the UK before you do

How do I get a tax refund if I’ve changed my vehicle’s tax class?

If you modify or make changes to your vehicle then you may be eligible for a car tax refund. For example, you won’t have to pay tax if you modify your car to be used for the disabled.

You may also downsize the engine or change the fuel type. This may change your vehicle’s tax class / band too. You will first need to notify DLVA of any changes.

If your tax rate decreases you will pay the decreased rate from the first day of the next month. You can find out more about modifying your vehicle here.