All you need to know about road tax (Vehicle Excise Duty)

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All you need to know about road tax (Vehicle Excise Duty)

Road tax, car tax, vehicle tax; whatever you call that little paper disc in the windscreen of your car, there’s more to it than you might think.

Of all the many taxes and duties that the British motorist pays, road tax is the most misunderstood. It’s not even called road tax, its official name is Vehicle Excise Duty and the money it raises does not – contrary to popular belief – only pay for roads; that stopped in the 1930s!

The amount you pay for your road tax varies. If your car was made before 2001 then the road tax is based on engine size. If your vehicle was registered after 1 March 2001, charges are worked out based on the carbon dioxide emissions per kilometre. For some vehicles, the first year of road tax will cost more. This ‘first year rate’ only applies for the year in which the vehicle was manufactured, but it could cost the driver up to £540 extra.

How much will my road tax cost me?

Car emission band Cost Cost for first year
Band A (up to 100 g/km) £0 £0
Band B (101-110 g/km) £20 £0
Band C (111-120 g/km) £30 £0
Band D (121-130 g/km) £95 £0
Band E (131-140 g/km) £115 £115
Band F (141-150 g/km) £130 £130
Band G (151-165 g/km) £170 £170
Band H (166-175 g/km) £190 £265
Band I (176-185 g/km) £210 £315
Band J (186-200 g/km) £245 £445
Band K (201-225 g/km) £260 £580
Band L (226-255 g/km) £445 £790
Band M (over 255 g/km) £460 £1000

Luckily for new and learner drivers, typical first cars have small, economical engines and, generally speaking, are cheaper to tax than most vehicles. For maximum savings, pick one of the eco models such as the Fiesta 1.0T Ecoboost; they won’t cost you a penny in road tax.

How to buy road tax

The quickest and easiest way to buy road tax is to do it online. So long as you’re the registered keeper of the vehicle, your details are up to date with the DVLA, you have valid insurance and MOT and you have a valid credit or debit card, you can visit GOV.uk to buy your car tax.

You can also apply at your local Post Office. Not all branches can issue car tax, so be sure to check www.PostOffice.co.uk/vehicle-tax before you make the journey.

To apply at a Post Office you’ll need the following:

  • Your V11 reminder (if you’ve received one).
  • Insurance certificate or cover note.
  • MOT test certificate.
  • Payment by cash or card.

You can also call 0300 123 4321 to apply by phone.

How to get free road tax

If you don’t want to pay road tax, you’ve got two options. You can drive a very eco-friendly car such as the Fiesta mentioned above or you can choose to drive one of the vehicles exempt from taxation. These vehicles include: vehicles made before 1973, electric vehicles, steam-powered vehicles and vehicles for disabled people in receipt of higher rate Disability Living Allowance or War Pensioners Mobility Supplement. To find out more about vehicles exempt from vehicle tax, visit GOV.uk.

What does road tax get spent on?

Short answer: Pretty much anything that the government wants to spend it on. This might be new roads, or it might be luxury loo roll for Westminster. It’s hard to know exactly.

Long answer: All tax pretty much ends up in one of two places: either the coffers of the Exchequer or your local authority. Road tax and income tax go to the former and parking fees and the congestion charge (if you’re a Londoner) end up in the latter.

As difficult as it can be to work out where your road tax ends up, one thing is clear: the government is taking far more than it is spending on roads. In 2010 fuel taxes and road tax raised roughly £32 billion. In the same year the government spent about £23 billion on transport. £5.7 billion went on local roads, £3.75 billion on national roads, £7.6 billion on railways and £4.9 billion on local public transport.

A good chunk of your road tax does probably end up fixing potholes and building new bridges, but since road tax goes into the Exchequer’s big pot of cash, it’s hard to follow each individual pound through the system.

What about cyclists?

At some point, most cyclists would have heard a disgruntled motorist shouting something about road tax and cyclists having no right to be on the road since they don’t pay for it. This is unfair and incorrect; cyclists have as much right as motorists to use the roads, and here’s why:

As we’ve already mentioned, ‘road tax’ is just the common name for Vehicle Excise Duty, a tax worked out based on the carbon dioxide emissions a vehicle produces. Since bicycles produce no emissions bar a bit of sweat, they pay no duty.

On top of that, 87% of cyclists also regularly drive cars, so are paying the same road and fuel taxes as other road users.

Image via Pete