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.

If it is, you should have received a ‘Vehicle Licence Application/Statutory Off Road Notification’ (V11 reminder) from the Driver and Vehicle Licensing Agency (DVLA).  You normally get this around three weeks before your tax disc expires.

You can use your V11 reminder to renew your tax online, by phone, by post or in person.  Keep reading to find out how.

Don’t apply for your car tax too early

You can use your V11 reminder to renew your tax disc or make a Statutory Off-Road Notification (SORN).

However, you can only use your V11 renewal form after the fifth day of the month that your current tax disc/SORN is due to expire.  For example, if your tax disc will run out at the end of May, you can use your V11 form to renew your tax disc after 5^th May.

Taxing your car online or by telephone

When taxing your car online or by telephone, you’ll need the reference number on your V11 reminder form.  Our guide here explains how you go about applying for a tax disc online.

Taxing your car by post or at a Post Office® branch

You can use your V11 reminder form to renew your tax disc by post or at any Post Office branch that issues tax discs.  When you renew your tax disc by post or in person you’ll need to take/send:

• An insurance certificate or cover note for your car which must be valid when the tax disc starts (not just valid the day you buy your tax disc)
• Your completed V11 reminder form
• A MOT certificate that must be valid when the tax disc starts (if your car is over three years old)
• The correct payment for your tax disc.  This will be shown on your V11 reminder form.  If your vehicle is exempt from paying vehicle tax then you won’t need to pay to renew your car tax

Once your tax disc is renewed you will be given your V11 reminder form back.  If you apply by post it will be sent back to you.

Taxing your car if you’ve changed your name and/or address

If you have changed your name or address, you should write your new details in section six of your registration certificate (V5C).  Sign this certificate and include it with your tax application at a Post Office® or DVLA local office.

Taxing your car if you’re due to be abroad when your tax expires

You have several options if you are going to be abroad when you car tax expires:

• Tax your car online from anywhere in the world using the DVLA website
• Tax your car in advance (you can tax from the 5^th day of the month in which your tax disc expires using the V11 reminder form)
• Ask someone to tax your car for you in your absence by taking all the appropriate documents into a Post Office

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 can tax your vehicle in the disabled tax class, the rules and a different process to follow are different from getting a normal tax disc.  Our guide explains more.

When you’re eligible to tax your vehicle in the disabled tax class

Do you want to tax your vehicle in the disabled tax class and get a free tax disc?  If so, you must be receiving one of the following qualifying benefits:

• War Pensioners Mobility Supplement
• The higher rate of the mobility component of Disability Living Allowance

If you receive one of these benefits, you may be entitled to an exemption certificate. You will need this to get your free tax disc.  Your exemption certificate could be your:

• DLA404 certificate
• Certificate of Entitlement to Disability Living Allowance (DLA) – see below
• MHS330 Certificate (Disabled Passenger Scheme only)
• WPA0442 War Pensioners Mobility Certificate

Bear in mind that your certificate must be valid and can only be used to tax one vehicle at a time.

Your Certificate of Entitlement to Disability Living Allowance (DLA)

In October 2011, the Pensions, Disability and Carers Service (PDCS) introduced a new exemption certificate called the Certificate of Entitlement to DLA.

If you remain entitled to the higher rate mobility component of DLA you can use this certificate to get a free tax disc.

You can continue to use your DLA404 certificate until it is full or has expired.  You should then contact PDCS for the new reuseable certificate.

How to tax in the disabled tax class for the first time

Applying for your first free tax disc is different from renewing it every year.

If you’re buying a new vehicle, you should to take the exemption certificate and a valid insurance certificate to the dealership.

For used vehicles, you can change the tax class at a Post Office branch that issues tax discs. You must have your vehicle registration certificate (V5C), insurance certificate and MOT certificate (if applicable).

Once you have got your disabled tax disc, you can apply for a refund for any remaining months on your old tax disc.

Renewing your free tax disc

When it comes to the time to renew your free tax disc, you have several options.  The registered keeper of your vehicle should get a ‘Renewal reminder to get a tax disc or make a Statutory Off Road Notification (SORN)’ (V11), before the current tax disc runs out.

You can renew your tax disc with your V11 or V5C (which shows the tax class as disabled) online or by phone.

Alternatively, you can renew at a Post Office branch that issues tax discs.  You’ll need your V11 or V5C, exemption certificate, insurance certificate and MOT certificate (if applicable).

If you don’t have a Registration Certificate (V5C) or new keeper’s details (V5C/2) you can tax your vehicle at your local DVLA office.  However, you will have to be shown as the registered keeper of the vehicle on DVLA records.  If you’re not shown as the registered keeper on DVLA records, you cannot tax the vehicle.

Since March 2001, the car tax on all newly registered cars has partly been based on the carbon dioxide (CO2) emissions produced by the car.  As part of legislation designed to reward people with more environmentally friendly cars, 13 car tax bands were introduced.  Cars in lower bands – with lower CO2 emissions – pay lower car tax than other cars.

But, how do the emissions affect the cost of your car tax?  And how do you know how much you will pay?  Keep reading to find out.

Car tax is based on CO2 emissions

Cars registered after 1 March 2001 are taxed based on their CO2 emissions.  These are measured in grams per kilometre (g/km) driven.

Cars with lower emissions are in a lower tax band and pay less road tax.  Some cars in low bands pay no tax at all.  For example, if the CO2 emissions on your car are under 100 g/km, you won’t pay any road tax.  You still have to apply for and display a tax disc, but it won’t cost you anything.

At the other end of the scale, if the CO2 emissions of your car are over 255 g/km you will pay the highest rate of car tax – currently £460 per year.

How to find out what the CO2 emissions are on a car

There are two main ways to find out the CO2 emissions on a car and, therefore, what car tax band it is in.

Firstly, if you own the car you can look at your Registration Certificate (the V5C form).  This document will show what the emissions are on the car that you own.

If you don’t own the car – perhaps you are considering buying a new or used car – then you can head online to the DVLA website to check out which band a certain make and model will fall into.

The website also lets you search for cars by car tax band.  This can help you find a car with low emissions in a low tax band.

Examples of cars in the various bands include:

• Band A (the lowest band) –Audi A1 1.6 TDI 105PS, Fiat 500 & 500c (2010 onwards) TwinAir, Mini 1D hatchback (with particle filter), Renault Clio 1.5 dCi 88 ECO
• Band G (the middle band) –BMW 320i coupe, Ford S-Max (post 2011) 2.0 Duratorq, Mazda 6 2010 2.0 5 door, VW Passat saloon 1.8 TSI 160PS SE
• Band M (the highest band) –Bentley Continental GTC, Jaguar XF 5.0L V8, Nissan GTR Coupe (2011 model), Porsche 911 GT3 RS

Bear in mind also that if you are buying a new car, the amount of car tax you have to pay in the first year can be different.  This is particularly true for the cars in the very low and very high tax bands.

Cars in band H and upwards will pay a higher amount of car tax in the first year, while cars in bands D and below won’t pay anything in year 1.

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.

If so, one thing to bear in mind is that the road tax for some cars when they are first registered is more expensive than it is in subsequent years.

Keep reading to find out which types of car are affected and how much additional road tax you will pay.

Increased car tax for new registrations

From 1 April 2010 new car tax rates came into force for cars first registered after that date.  In some tax bands it is now significantly more expensive to tax a car for the first time.

All subsequent tax discs will be charged at the standard rates.

However, while the cost of a tax disc was increased for many cars, some tax bands actually benefit from reduced road tax in the first year.  Our guide explains the various differences between tax disc costs for first and subsequent registrations.

Cars in tax band A

Cars in tax band A are those with CO2 emissions of under 100 g/km.  As no road tax is payable for these vehicles the rates are always ‘zero’ in the first and subsequent years.

Cars in tax bands B – D

When you first register a car in tax band B, C or D (cars with CO2 emissions of between 101 and 130 g/km) you actually won’t pay any car tax for the first year.

You will then pay the standard road tax appropriate to your car’s band from the second year onwards (currently £20, £30 or £95 depending whether your car is in Band B, Band C or Band D).

Cars in tax bands E – G

Cars in tax bands E, F and G (cars with CO2 emissions of between 131 and 165 g/km) incur the same road tax at first registration as they do in subsequent years.  This is currently £115, £130 and £165 for 12 months’ tax for bands E, F and G respectively.

Cars in tax bands H – M

If your car is in tax band H to M (cars with CO2 emissions over 166 g/km) you will pay a higher level of road tax at first registration than you will in subsequent years.

The current (2011/12) rates are (all figures are for 12 months’ tax):

• Band H – First registration £265                Subsequent registration £190
• Band I – First registration £315                 Subsequent registration £210
• Band J – First registration £445                 Subsequent registration £245
• Band K – First registration £580                Subsequent registration £260
• Band L – First registration £790                 Subsequent registration £445
• Band M – First registration £1,000           Subsequent registration £460

If you’re not sure what the emissions of your new car are you should check with your salesperson or with the dealership.  For cars you have recently purchased you can check your V5C (Registration Certificate) or enter the make and registration number of your car into the ‘online vehicle enquiry’ section of the DVLA website.

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