What is a Vehicle Tax?

Whether you currently own an old vehicle for a while or are planning for years on applying for car finance, it’s vital to be aware of the costs of driving in the UK. One particularly essential expense is to check car tax. But what is it?

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In this blog post on vehicle tax and dvla tax, we have explained what vehicle tax is, how much to pay, and much more.

Table of contents

What is a Vehicle Tax?
Why do we pay vehicle tax?
How much is car tax for 2022/23?
Do I have to pay vehicle tax in 2023?
How to pay vehicle tax?
How to claim back car tax?
What happens if I pay my car tax late?
Final thoughts

What is a Vehicle Tax?

All privately owned vehicles that run on public roads in the United Kingdom must be taxed.

The DVLA, or Driver and Vehicle Licensing Agency, regulates and maintains this database. The rules regarding taxation have undergone several changes in recent years.

A vehicle can be exempt from the vehicle tax and dvla tax if it is not in use, that is, off the road for any reason.

Why do we pay vehicle tax?

We pay vehicle tax as a form of general taxation.

The tax is imposed on the use of motor vehicles rather than the use of roads, and the money we all pay goes into the consolidated fund overseen by the Chancellor- in the same fund as other taxes like corporation tax.

The local authorities and Department for Transport are jointly liable for the upkeep of the UK’s roads.

Although the government sets their budgets for these, there is no direct link from what we collectively contribute in VED to financing the maintenance of the nation’s roads and vehicle infrastructure.

Road taxes are just another type of personal tax that people pay on their car usage and which goes into a fund that the government can use as needed.

How much is the car tax for 2022/23?

With the cost of living crisis spiralling every day, nothing’s getting any cheaper at the moment, and unfortunately, vehicle tax is going the same way.

Known more simply as road tax or car tax, the new vehicle tax rates for 2022-2023 were introduced as part of the Spring Budget.

And the news from the Chancellor is that the standard car tax rate for vehicles is on the rise, with vehicle tax for cars registered after 2017 rising by 6%, from £155 to £165.

The rates have also increased for the first year of car tax for most other cars in addition to the standard rate (which is the rate you pay after the first year of registering the vehicle).

However, some low-polluting vehicles, those producing 0-75g/km of CO2, will pay the same as they did in 2021-2022.

As an instance, vehicle owners releasing CO2 emissions of 171-190g/km will now pay £945 (up from £895) for their first year of vehicle tax, while those with vehicles that release 191-225 g/km must now pay £1,420 (up from £1,335), an increase of £85 on last year.

Do I have to pay vehicle tax in 2023?

Vehicle owners likely need to pay road tax. However, some exceptions could make you exempt from car excise duty.

 Entirely electric vehicles are completely exempt from road tax (as long as their list price is under £40,000). You can also expect to save a lot of money on fuel, but before you switch, it’s crucial to look into the local charging infrastructure.

Your car is exempt from road tax if it is more than 40 years old and was registered before the 1st of January, 1982. However, you must request an exemption rather than just driving around in your classic car and assuming everything would be fine.

Some disabled drivers may register as being exempt from paying vehicle excise duty.

How to pay vehicle tax?

When it comes to paying car tax, you can quickly pay your vehicle tax online.

It is the easiest payment method, enabling you to quickly finish the procedure step-by-step and start using your new car.

You will need a reference number from a recent DVLA reminder or your car’s logbook to pay online. You should ask the DVLA for a duplicate vehicle logbook if you don’t have either.

How to claim back car tax?

 If you’ve already paid your yearly car tax but no longer own the car (or it’s off the road), you can receive a refund for any remaining months.

You must contact the DVLA and inform them if your vehicle has been exported out of the UK, written off or scrapped, sold, removed off the road, or registered as exempt.

If necessary, your direct debit will then be cancelled, and you’ll get a check in the mail for any full months left on your payments.

What happens if I pay my car tax late?

If your vehicle tax payment to the DVLA fails, you’ll get an email to inform you of the failed transaction. Within four working days, the government will attempt to retake the payment.

Suppose the payment fails a second time. You’ll get a follow-up email notifying you that your direct debit has been cancelled and your car is no longer taxed.

At this point, it’s not legal to continue driving your car until you’ve told the DVLA that it’s officially ‘off-road’ or either taxed it. With the £80 penalty, there will be increasing fines as time goes on; your car may be crushed or clamped.

Final thoughts

A crucial part of being a responsible vehicle owner involves handling all legalities and costs, including maintenance, insurance, fuel and road tax (VED).

If you miss out on any of these, you won’t be able to drive your vehicle. So follow the points mentioned above and have a hassle-free driving experience.

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