Car Tax payments are an essential part of motoring, and there’s no avoiding making the payment unless you want points on your licence or fines. Checking your car tax to see when it is due is straightforward enough – just head to the web page and enter your car registration number and the website will show a big coloured box indicating whether the vehicle you are checking is covered. Green means that it is currently covered by tax, and the site will also display the month and year in which the tax expires. There is a similar box for the MOT status. It’s also important to bear in mind that you are free to check the tax and MOT status of any vehicle, not just your own. Although it takes just a couple of minutes to check your car tax online and find out the current status, the site won’t tell you how much you paid for your car tax the last time you renewed it, or what you could expect to pay the following year. Unfortunately, this is a much more difficult thing to work out.
Over the years, various governments have had different ideas about the best way to charge people for their car tax. Originally, the system purely looked at the size of the car engine, with a cut off point at which the higher rate of car tax started to apply. Then the thinking about the fairest way to calculate road tax changed, and it was decided that it was fairer to look at the amount of pollution that a car produced rather than just the size of the engine. When new systems are introduced, it is usually not applied retrospectively. This means that cars already on the road have their tax calculated using the old system, and the new system when introduced only applies to new registrations. Having two systems running in parallel, and multiple bands of charging for the first year only of car ownership can mean that even the car experts are a bit confused by what is going on. There are websites where you can check what level of tax you can expect to pay, but you will have to be very sure you are looking at the correct make, model and engine size of vehicle.
One of the most confusing aspects of the whole car tax system is that in the first year of owning a new car, drivers will pay car tax at a different, often more expensive, rate. The car tax in the year of first registration is as little as zero for the least polluting cars, up to as much as £2,365 for the most polluting cars with the biggest engines. Often, this is rolled into the price you are quoted when you look online for new car prices or negotiate a trade-in deal with the manufacturer. Just like VAT, most drivers have no option to avoid paying this higher level of tax in the first year, so it is added to the list price to avoid nasty surprises for drivers when they try to tax their new purchase. After the first year has passed, you will pay £165 per year for cars which run on petrol or diesel, £155 for cars powered by biofuel, LPG or which are hybrid, and zero for fully-electric cars.
The issue discussed above with two different systems for calculating car tax depending on the age of the car really comes into play when you are trying to work out how much you can expect to pay each year for a used car. If you are planning to buy a newer car, which was first registered within the last five years, the £165, £155 or zero rates will apply. If you are buying an older vehicle, that’s where things are complex, with a table of 13 different bands of charging based on CO2 emissions figures. Again, cars which produce no pollution are charged zero, but older cars which are higher up the scale can attract annual car tax of as much as £630. There is always the option to spread this cost over 12 months by setting up a monthly direct debit, but this also costs 5% more overall.
If you are buying a car which was first registered before 2001, but which is not old enough to fall into the category for historic exemption, the calculation of tax will depend on engine size. Older cars with an engine size of 1549cc or less will pay £180 per year. Vehicles with larger engines pay £295 per year.
The good news, despite the complexity of the system, is that it’s not your job to do the calculation about how much car tax to pay. When the reminder letter arrives in the post from the DVLA, log into the website with the reference number provided. The website will then display the tax calculation and allow drivers to choose whether they want to pay this sum in one payment, or spread the charges over the year. The level of car tax you can expect to pay probably isn’t the deciding factor when it comes to choosing which car you want to buy. But higher tax costs can influence the decision, as can higher insurance costs, and potentially higher repair costs too.
Not paying your road tax at all really isn’t a possibility. It is a legal requirement in the UK to make sure your vehicle is taxed and insured before taking it out on the road. If you drive past a police car fitted with special software to recognise numberplates, and the database recognises that you have no tax or insurance, you can expect a fixed penalty notice in the post. If the fixed penalty is not paid, then the amount of the fine can go up to as much as £1000. It’s easier than ever for the police to spot people who have not paid tax, and also easier than ever to go online and pay the bill.