Our guide tells you everything you need to know about road tax.  Keep reading to find out what road tax is, how it came about and how much road tax you should be paying.

What is road tax?

Vehicle Excise Duty (VED) – commonly known as vehicle tax, car tax and road tax – is a tax levied as an excise duty which must be paid for most types of vehicle which are to be used or parked on the public roads in the United Kingdom.

If you use or park your car on public roads in the UK, you will normally have to pay road tax.  You also have to display a tax disc as proof of payment.  The tax disc cannot be issued without proof that your vehicle has valid insurance and a valid MOT.

Road tax raised £5.63 billion in 2009 and is collected and enforced by the Driver and Vehicle Licensing Agency (DVLA).

The history of road tax

The first road tax was introduced in the UK back in 1888.  A ‘locomotive duty’ was levied at £5 (around £410 in 2012 terms) for each locomotive used on public roads.

In the budget of 1909, the then Chancellor of the Exchequer, David Lloyd George announced that that vehicle excise duties would be used to make the roads system self financing.  So, from 1910, the proceeds of road vehicle excise duties were dedicated to fund the building and maintenance of the roads.

The Finance Act 1920 introduced a ‘duty on licences for mechanically propelled vehicles’ and these duties were first imposed in 1921, along with the requirement to display a vehicle licence (tax disc) on the vehicle.

In 1937, the ‘road fund’ was abolished and proceeds from vehicle excise duties began to be paid directly into the Exchequer.

What road tax do you have to pay?

The rates of road tax change every year in the Budget.  The road tax you pay depends on the age of your car and its carbon dioxide (CO2) emissions.  All the rates below are from 1st April 2012.

If your car was first registered before 1 March 2001, you’ll pay £135 for 12 months tax and £74.25 for 6 months tax if the engine size is under 1549cc.  If the engine size is over 1549cc, you’ll pay £220 for 12 months tax and £121 for 6 months.

If your car was first registered after 1 March 2001, there are thirteen separate bands depending on the carbon dioxide (CO2) emissions of your car (measured in g/km).  The current road tax rates are:

• Band A (up to 100 g/km) – No car tax payable
• Band B (101 to 110 g/km) – £20 car tax per year (no 6 month option)
• Band C (111 to 120 g/km) – £30 car tax per year (no 6 month option)
• Band D (121 to 130 g/km) – £100 car tax per year or £55 for 6 months
• Band E (131 to 140 g/km) – £120 car tax per year or £66 for 6 months
• Band F (141 to 150 g/km) – £135 car tax per year or £74.25 for 6 months
• Band G (151 to 165 g/km) – £170 car tax per year or £93.50 for 6 months
• Band H (166 to 175 g/km) – £195 car tax per year or £107.25 for 6 months
• Band I (176 to 185 g/km) – £215 car tax per year or £118.25 for 6 months
• Band J (186 to 200 g/km) – £250 car tax per year or £137.50 for 6 months
• Band K (201 to 225 g/km) – £270 car tax per year or £148.50 for 6 months
• Band L (226 to 255 g/km) – £460 car tax per year or £253 for 6 months
• Band M (over 255 g/km) – £475 car tax per year or £261.25 for 6 months

Brand new cars registered after 1 April 2010 with CO2 emissions of over 130 g/km attract a different rate of car tax in the first year.  For example, the tax on a brand new car with CO2 emissions of 170 g/km would be £275 in the first year, compared to £195 if the car was several years old.

Keep reading for a full guide to how you get a car tax refund.

When you can apply for a car tax refund

There are various reasons you may be eligible for a refund.  These include:

• The vehicle has been sold or transferred
• The vehicle has been scrapped
• The vehicle has been stolen

You should post your refund application before the first day of the month that you are claiming the refund.  If you don’t provide details of why the car tax is no longer required your application will be rejected.

How to apply for a car tax refund

You can apply for a refund of car tax either with our without the tax disc.

Application for a refund with the tax disc

To apply for a refund with your tax disc you should complete and then print the online form V14 ‘Application for a refund of vehicle tax when you have the tax disc’.  This should be signed and sent to the DVLA with the tax disc.

Application for a refund without the tax disc

To apply for a refund without the tax disc you should complete the form V33 ‘Application for a refund of vehicle tax when the tax disc is missing’.  You can obtain the form from DVLA Customer Enquiries of your local DVLA office.

What to do if your car has been stolen

When you report the theft of your vehicle you will be given a crime reference number by the police.  You should provide these details on the V33 form.

You should wait at least seven days before applying for a car tax refund.

How much will my car tax refund be?

You will receive a refund for each full month left to run on the tax disc at the time you apply.  For example, if your tax disc expires at the end of October and you apply during August, you’ll receive a refund for two months.  Refunds cannot be backdated.

If it is a six month tax disc, you will have paid an extra ten per cent handling charge when you bought it.  This is not included as part of your car tax refund.

If you don’t have your tax disc an administration charge of £7 will be made and this will be deducted from the amount refunded to you.

If you paid a higher ‘first year’ car tax rate for a new car, you will only get a refund based on this higher amount if the vehicle has been stolen, scrapped or if its tax class has changed to a ‘nil value’ tax class.  For any other reasons, your car tax refund will be based on the lower standard rate.

When will I get my car tax refund?

DVLA say that car tax refunds will take up to 6 weeks to process.

Cars registered before 1 March 2001

If your car was first registered before 1 March 2001, there are only two bands of car tax.

If the engine size is under 1549cc, from 1^st April 2012 you’ll pay £135 for 12 months tax and £74.25 for 6 months tax.  If the engine size is over 1549cc, you’ll pay £220 for 12 months tax and £121 for 6 months.

Cars registered after 1 March 2001

If your car registered after 1 March 2001, there are thirteen separate bands depending on the carbon dioxide (CO2) emissions of your car (measured in g/km).

If your car has emissions of less than 100 g/km CO2 emissions, you won’t pay any car tax.

The cost of your road tax then rises as the emissions rise, from 101 g/km to over 255 g/km.  You can find out the CO2 emissions of your car by checking the registration certificate or enquiring on the DVLA’s Electronic Vehicle Licensing website.

The information below shows the costs of car tax from 1 April 2012.  The cost depends on your band and whether you want 6 or 12 months tax.

• Band A (up to 100 g/km) – No car tax payable
• Band B (101 to 110 g/km) – £20 car tax per year (no 6 month option)
• Band C (111 to 120 g/km) – £30 car tax per year (no 6 month option)
• Band D (121 to 130 g/km) – £100 car tax per year or £55 for 6 months
• Band E (131 to 140 g/km) – £120 car tax per year or £66 for 6 months
• Band F (141 to 150 g/km) – £135 car tax per year or £74.25 for 6 months
• Band G (151 to 165 g/km) – £170 car tax per year or £93.50 for 6 months
• Band H (166 to 175 g/km) – £195 car tax per year or £107.25 for 6 months
• Band I (176 to 185 g/km) – £215 car tax per year or £118.25 for 6 months
• Band J (186 to 200 g/km) – £250 car tax per year or £137.50 for 6 months
• Band K (201 to 225 g/km) – £270 car tax per year or £148.50 for 6 months
• Band L (226 to 255 g/km) – £460 car tax per year or £253 for 6 months
• Band M (over 255 g/km) – £475 car tax per year or £261.25 for 6 months

The biggest increases to the cost of road tax are in bands K, L and M.  Band K sees a £10 increase in the cost of 12 months tax while bands L and M see a £15 increase.  Bands D to J see an increase of £5 for 12 months tax.

Cars first registered after 1 April 2010

Brand new cars registered after 1 April 2010 with CO2 emissions of over 130 g/km attract a different rate of car tax in the first year.  For example, the tax on a brand new car with CO2 emissions of 170 g/km would be £275 in the first year, compared to £195 if the car was several years old.

If you receive this form – the V11 reminder – you can tax your car from the fifth day of the month that your current tax disc or SORN is due to expire.

However, to tax your car you will need some important documents.  Keep reading to learn more.

V11/V10 form

If you have a tax disc to renew then you will generally receive a V11 reminder form from DVLA.  You can use this form to renew your tax disc or to make a SORN in person at any Post Office branch that issues tax discs or by post to the address shown on the V11 reminder form.

The V11 reminder will be returned to you when the tax disc is issued.

If you don’t have a V11 reminder form then you may need a V10 ‘Vehicle licence application’ form instead.  This can be downloaded from the DVLA website.

You will need this form when you tax your car by post to selected Post Office branches or at a DVLA local office.

Insurance certificate or cover note

To tax your car you will need an insurance certificate or cover note that is valid on the day the car tax comes into force.

Your insurance must cover you against third party claims for death or injury and damage to property caused by using the vehicle and cover your use of the vehicle for taxing purposes.

Faxed copies and copies of your insurance certificate downloaded from the internet are acceptable.  However, you can’t use a renewal notice, policy schedule, receipt for payment or a photocopy of your insurance certificate or cover note.

Your MOT certificate

An MOT test is needed every year for cars, motorcycles, motor caravans and light goods vehicles that are more than three years old.

When you purchase your tax disc you have to produce an MOT test certificate that’s valid on the day the tax disc comes into force.

For example, you can’t use an insurance certificate that is valid until 31 December if your tax disc is to start on 1 January.

As with your insurance certificate, you have to produce the original MOT certificate.

But how does it work?  What do you have to do?  And how can you prove your car has a valid MOT and insurance if you apply online?  Keep reading to find out.

Where to go to apply for a tax disc online

If you want to apply for your car tax or declare SORN online you should head to the DVLA’s vehicle online service.  You can use this service 24 hours a day, 7 days a week.

Here you can apply for a tax disc, declare Statutory Off Road Notification and find the answers to common questions.  You can also use the ‘vehicle enquiry’ service to find out what information the DVLA holds on file about a particular vehicle.

If your address has changed you should ensure this is changed before you apply for a tax disc online.  You can’t change your address as part of the process.  Similarly, you shouldn’t use the online service if you’ve recently moved house and you haven’t yet received your registration certificate with your new address.

The process

Once you have reached the DVLA site you will have to click the ‘Apply for a tax disc’ link.  You’ll then have to confirm several statements including that you have a valid MOT, that you have valid insurance and that your Registration Certificate contains your correct, current address.

You will then need your 16 digit V11 Reminder Reference Number or the 11 digit reference number from your Registration Certificate.  You’ll also need the registration mark (number plate) of your vehicle.

You will then need to confirm that the details of the vehicle are correct and proceed to the payment screens.  Bear in mind that a surcharge of £2.50 applies if you pay for your tax disc by credit card while debit card payments remain free of charge.

How does DVLA check insurance and MOT certificates?

When you apply for a tax disc using the DVLA’s online service, the vehicle’s insurance will be electronically checked with the Motor Insurance Database run by the Motor Insurers’ Bureau (MIB).

MOT certificates will also be checked electronically with the MoT database.

What happens next?

When you have completed the process and paid for your tax disc, your car tax disc will be sent to your registered address.

You are legally allowed to continue to drive your vehicle for up to 5 days after the tax disc has expired while you are waiting for the new tax disc to arrive through the post.  During this period you should continue to display your existing (expired) tax disc on your vehicle.

If the tax disc has not arrived within five working days you should contact DVLA.  You should have the reference number to hand.

In this case, you’ll have to exchange your tax disc.  Keep reading to find out when you have to exchange your tax disc and how you do this.

When you have to exchange your tax disc

You should apply to exchange your tax disc if:

• You change the type of fuel your vehicle uses
• The cylinder capacity (cc) of your engine changes
• The tax class of your vehicle changes
• You change the use of a vehicle you have just bought
• You alter the number of seats on a bus

If you change the engine size or the fuel type which results in a lower rate of road tax you will have to provide documentary evidence of this change to the Driver and Vehicle Licensing Agency (DVLA).

How to exchange your tax disc

You can exchange your tax disc at your local DVLA office, either in person or by post.  For private and light goods vehicles you will need to send or take:

• A V70 form , called ‘Exchange of Vehicle Licence Application Form’ (this can be downloaded or collected from any Post Office® branch or DVLA local office)
• A valid insurance certificate
• A valid MOT test certificate (if needed)
• Your current tax disc
• Your Registration Certificate with any changes marked on it
• Documentary evidence of a reduction in engine size of a change in the type of fuel (as above)
• Any extra payment that is required

For lorries and buses the requirements are broadly the same except you may also need to provide a plating and weight certificate.

Paying any extra road tax that is due

If you exchange your tax disc you may have to pay an additional amount of road tax if your vehicle is now in a different class.

To work out the amount of additional road tax that you should pay, you should follow this four step process:

1. Work out the new rate of vehicle tax you have to pay

2. Work out the difference between the new rate of tax and your current rate of road tax

3. Divide the difference by the period of your current tax disc (6 or 12 months)

4. Multiply this by the number of months left to run on your current tax disc

However, don’t panic.  There are ways that you can tax your vehicle if you’re going to be overseas when your tax expires.  Our guide looks at your various options.

Tax your vehicle in advance

If your tax will expire whilst you are abroad, you can renew your tax up to two calendar months in advance.  You can do this in person or by post at a Post Office® branch that deals with advance applications or at a Driver and Vehicle Licensing Agency (DVLA) local office.

You should take or send:

• A completed V10 ‘vehicle licence application’
• Your registration certificate
• The payment for the tax
• An MOT certificate that must be valid when the tax disc comes into force (if applicable)
• An insurance certificate or cover note that must be valid when the tax disc comes into force

If you are making a postal application you should also include a letter explaining why you are taxing in advance.

You can have your tax disc sent to an overseas address.  To do this you should supply the foreign address in a covering letter and include this with your tax disc application. Your Great Britain address must be written on the V10 ‘Application for a tax disc’ form.

Tax your vehicle online or by phone

If you are going to be overseas on the expiry of your tax disc you can tax your vehicle online or by phone.  By using the reference number on your V11 reminder form or on your Registration Certificate, you can renew your tax from the fifth day of the month in which the current tax disc expires.

Note that the tax disc can only be sent to the address shown on your V11 reminder or Registration Certificate.  If you then need this forwarding to a foreign address you can ask a friend or family member to do this for you.

Get someone else to tax your vehicle for you

An alternative to applying well in advance for your tax disc is to ask a relative or a friend to tax your vehicle for you.  They can use the V11 reminder or V10 ‘Application for a tax disc’ forms with your Registration Certificate.

Once they have the tax disc they can post it to you if your vehicle is abroad or they can put the tax disc on your vehicle.

If you take your vehicle abroad, it must have a valid tax disc at all times. When you return from abroad, you must have a valid tax disc to be able to drive your vehicle home or you’ll be committing an offence. There are no concessions.  This means that if your vehicle is abroad when your tax disc expires you should take the replacement tax disc with you or have it sent to you whilst you are overseas.

If your vehicle is exempt you will still have to display a tax disc and renew it every year.  Our guide looks at the vehicles that are exempt from vehicle tax.

Vehicles that are exempt from road tax

There are several types of vehicle that are exempt from road tax.  These include:

• Vehicles used by disabled drivers – if you are a disabled person then you may be exempt from vehicle tax if you receive certain benefits.  You could be able to tax your vehicle in the disabled tax class
• Steam powered vehicles – all steam powered vehicles should be taxed in the steam-propelled class
• Invalid carriages, powered wheelchairs and mobility scooters – these vehicles are normally exempt as long as they have a maximum speed of eight miles per hour on the road and four miles per hour on the footpath
• Electric vehicles – these vehicles should be taxed in the electric vehicle class.  The power must come from an electric storage battery or an external source
• ‘Historic vehicles’ – if your vehicle was built before 1 January 1973 it can be taxed in the ‘historic vehicle’ class
• Mowing machines – vehicles designed with the sole purpose of cutting grass should be taxed in the mowing machine class
• Forestry, agricultural and horticultural vehicles – if your vehicle is used for the sole purpose of forestry, horticulture or agriculture then it will be exempt from vehicle tax

How to tax your vehicle if it is exempt from road tax

If you visit your local Driver and Vehicle Licensing Agency (DVLA) office then you can change to the exempt tax class.

If you are renewing your ‘free’ tax disc then the DVLA will send you a reminder every year.  The V11 form will be sent to you so you can renew your tax disc.

If you see a car on the road without a tax disc, or with a tax disc that has expired, you can report it.  You can do this either online or via the post.

Our guide looks at how you report a car with no tax disc.

Checking if a car is taxed

You can see from a tax disc on a car if it is out of date.  Alternatively, you can check if a car currently has valid tax by using the Driver and Vehicle Licensing Agency (DVLA) online vehicle enquiry service. To do this you will need to know the model and registration number of the vehicle.

If a car isn’t taxed

If a car isn’t taxed, the information you will need to make a report includes:

• The registration number
• The make and model
• The colour
• The location of the car
• The name and address of the owner (if you know this)

You can report the vehicle online using the DVLAs online service or by post by writing to The Enforcement Section, E89/A2, DVLA, Longview Road, Swansea, SA7 0XZ.

What happens next

When you report an untaxed car, the details will be entered onto a database.  The DVLA works with NSL to operate a fleet of wheel clamping vehicles across the UK.  An untaxed vehicle will be investigated by the nearest NSL pound.

If you report an untaxed car it will not necessarily be clamped.  The DVLA have other options such as imposing a ‘late tax’ penalty of £80 to the keeper of the vehicle.

The DVLA regularly monitors for untaxed cars and they issue more than 90,000 penalties every month.  This means that some untaxed vehicles in your area may have been issued with one of the £80 fixed penalties and will not be wheel clamped.

Additionally, road tax can generally work out more expensive if you buy it every 6 months than if you buy it every 12 months.

Our guide looks at three things you should know about buying 6 months car tax.

6 months car tax is not available if your annual road tax costs under £50

If your annual car tax costs under £50, you won’t be able to buy 6 months road tax.  If your car was first registered after 1 March 2001 and its CO2 emissions are under 120 g/km then you will be in bands A-C.  As the cost of 12 months tax is under £50 for cars in these bands, you can only buy an annual tax disc and not a 6 month one.

You can’t get 6 months tax on all new registrations

Vehicles being registered for the first time after 1 April 2010 in bands A to D will also not be able to get a six-month tax disc at first registration.  As no road tax is payable for cars in bands A-D on first registration, only a 12 month tax disc is available.

And, cars registered after 1 April 2010 in bands H to M will also not be able to buy a six-month tax disc. This is because the first year rate for these vehicles is higher than the normal standard rate. If you have a vehicle in these bands you will be able to get a six-month tax disc when re-taxing.

6 months tax works out more expensive than 12 months tax

Taxing your car for six months generally works out more expensive than taxing it for twelve months.  For cars registered after 1 March 2001 in bands D to M, 6 months tax works out proportionately 10% more expensive than buying 12 months tax.

For example, taxing a car in band F costs £130 for a year or £71.50 for 6 months (equivalent to £143 per year).