If you’ve just passed your driving test and are set to buy your first car then you’re going to need to know about road tax.
Vehicle Excise Duty (VED), commonly referred to as ‘car tax’ or ‘road tax’ is compulsory for just about every type of car in the UK.
There are only two types that do not need tax; those that are over 40 years old and electric cars which cost more than £40,000.
If your car doesn’t fit in to either of those categories then you will need to purchase road tax.
The tax pays for you to use your car on UK roads.
Without the tax, your car is not entitled to even park on the road, let alone drive on them.
Thankfully, not all cars are taxed equally and so choosing which car you purchase can make a big difference to how much tax you have to pay.
When you purchase a car, you will be handed a V5C/2 form or ‘green slip’ from the seller.
They will advise if there is any tax remaining on the car, but increasingly cars will not come with any tax.
This is because road tax can be paid for monthly on a direct debit whereas in past years it has been an annual sum which covered the car for the year.
This meant that buying and selling cars with tax still covered was commonplace.
If no tax is purchased, you will need to use the V5C/2 form to purchase tax.
See our step-by-step guide below.
Road tax or ‘VED’ is just another one of those cost that you must associate with owning and driving a car.
If you have a vehicle that goes on the road, you are almost certainly going to need to pay for the tax unless you have exemption (see ‘useful information’ below).
This guide has been written to try and give you all the information about what road tax is, why it exists, how much you’ll have to pay and how you go about purchasing road tax for your car.
Our guide is aimed to be as comprehensive as possible, so we’ve put it together in our usual format to keep things simple and easy-to-follow:
We’ve broken our step-by-step guide down in to two sections.
Firstly, we’re going to go through the very simple process of how to purchase road tax for your car.
Secondly, we will provide a simple breakdown of tax bands to give you an idea of what you will need to pay for your car.
How To Tax Your Car: Step-By-Step Guide:
Road Tax Brackets/Bands Explained:
Road tax is calculated based on either engine size, fuel type or the level of carbon dioxide it emits.
There’s also some dependence on when the car was first registered.
If your car was registered after 1st March, 2001 then the car tax bands are split depending on emissions.
The lower the emissions of the car, the lower the vehicle tax will be.
This is obviously an important consideration when you’re purchasing a car.
The bands stretch from £0 per year up to £550 per year.
For cars registered before 1st March, 2001 they are classed as Private/Light Goods vehicles or private motor cars.
If the car is under or equal to 1549cc then tax for a year will be £145. Over 1549cc and the tax will cost £235 per year.
Road tax is a pretty simple subject on the face of it but there are a few particular bits of information which you really should be aware of.
These are as follows:
If the car is not in use and will not be in use for the foreseeable future and it is stored on private land (i.e. not a public road), then you do not need to pay road tax.
You will however have to declare this and request a SORN certificate.
This stands for Statutory Off Road Notification.
To tax a car you need to have valid car insurance in place for the start of the period you are taxing the vehicle for.
You will also need a valid and up-to-date MOT for your car when you tax it.
This is not required if your car is brand new within the first three years.
There are some car owners who are exempt from car tax.
We have outlined those as follows for clarity:
Zero Emissions & Price Less Than £40,000:
If you own a car that produces 0 grams of carbon dioxide (CO2) then you don’t need to pay road tax so long as the car costs less than £40,000 when new.
This is pretty much exclusive to electric cars.
Registered Between 1st March 2001 – 1st April 2017 & Producing Less Than 100 Grams Of CO2 Per KM Driven:
If your car falls in to this category then you’re also exempt from paying road tax on that vehicle.
Road tax is an important cost to consider when you’re purchasing your first car.
You may be tempted to purchase the best car you can afford in that moment but if you do so without doing the necessary homework then you may be opening yourself up to a world of additional financial commitments, including road tax.
You should also check out our guide specifically about buying your first car and the things to be aware of.