Everything You Need to Know About Car Tax

As a car owner or potential car owner, you've most likely heard about Vehicle Excise Duty (VED), more commonly known as car tax. Understanding what this means and how it's calculated is important, as it can help with those all-important car purchasing decisions. Car tax is largely dependent on how environmentally-friendly a model is, and there are a few factors taken into consideration. Read on to find out what determines car tax and how to find out tax levels on specific models.

By Gumtree Editorial Team

18 February 2021 4 min read

What is car tax?

Originally introduced in 1937, car tax is an annual levy paid by car owners for the use and parking of their vehicles on public roads. Several factors determine how much a car owner is required to pay, including engine size, CO2 emissions, and fuel type. For example, the more CO2 your car emits, the more tax you’re required to pay. These payments are forwarded into road improvement projects or other community development projects.

How is car tax calculated?

As mentioned above, the amount of tax you pay depends on how environmentally friendly your car is, as well as other factors such as what system or band it falls under. Another important factor to consider is the first-year rate. This is charged for new cars only for the first year, after which the car owner will be required to pay the standard rate.

Calculating car tax on your own can be daunting, especially since it consists of four different systems and bands:

Classic car tax band that covers cars older than 40 years
Tax band for cars registered before 2001
Tax band for cars registered between 2001 and April 2017
Tax band for cars registered after April 2017

Thankfully, there are platforms online like www.gov.uk/tax-disc that can save you the stress and give you accurate figures to work with.

Is car tax transferable?

The simple answer to this is no. When you buy a used car, even if the previous owner’s tax payment has not yet expired, you’ll still need to tax the car before you can take it home. The same applies if you’re the seller, though you can receive a refund on the remaining tax after the transfer of ownership.

How do you tax a car?

You can tax your car using any of the following means:

Taxing your car online. This is the most convenient way to tax your car. All you’ll need is a couple of reference numbers from documents like a vehicle logbook (V5C) in your name, a new keeper’s logbook, or a recent reminder (V11) from the DVLA
Taxing your car via the phone. If you’re more traditional, you can opt for taxing your car over the phone by calling the DVLA’s 24-hour service on 0300 123 4321. Just keep in mind that debit card payment won’t be available using this method
Taxing your car at the Post Office. If you want to go even more old school, you can tax your car at the nearest post office. As long as the branch you visit carries out car taxing, you shouldn’t have anything to worry about. However, you’ll need your MOT certificate, evidence of payment, and V11 or V5C or V5C/2 documentation

If your car is currently off the road, you’ll need to register it via SORN so that you’re not eligible for road tax.

Taxing your car, new or used, is an important requirement for owning and being able to use your car on public roads. Avoiding car tax can render your insurance invalid and can lead to bigger problems with the law. For more essential info on car buying and ownership, be sure to check out our advice guides hub.

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