Taxing a car

Navigate the complexities of Vehicle Excise Duty - also known as road tax - with this comprehensive guide to taxing a car

Shane Wilkinson
Jul 1, 2021

Taxing your car is now easier than ever, with three payment options to choose from. The quickest and simplest way is online at www.gov.uk/vehicle-tax. Alternatively, you can use the more traditional method of visiting a Post Office branch that deals with car tax, or you can pay over the phone on 0300 123 4321.

The amount that you pay will depend on the car tax rate that your vehicle is liable for. You can choose to pay for a year’s tax upfront, which can then be renewed yearly by Direct Debit. You also have the option of paying for six months at a time, or in monthly instalments by Direct Debit, though these incur an additional 5% surcharge.

If you’re the new owner of a car, you will need to tax it before you drive it. For this, you’ll need the green section of the car’s logbook, known as the ‘new keeper’s details’ slip or 'V5C/2'.

As an existing owner, you should receive a reminder from the DVLA around a month before your car tax expires. If you pay your car tax by Direct Debit, however, no reminder is sent out, as your tax will be renewed automatically.

What do I need to tax a car?

To tax a car, you’ll need a reference number from one of four documents issued by the DVLA. Enter this number online and your vehicle’s details will pop up, along with the date that its tax expires.

One of these numbers is the 11-digit reference on your V5C logbook or the 16-digit reference on your V11 reminder - a letter that you’ll be sent around a month before your tax is due to expire. If you pay your tax by monthly direct debit, you will not receive a V11 but will instead have your tax automatically renewed.

If you forget to renew your tax, you may be sent a Last Chance warning letter. This will also have a reference number that you can use.

New owners must use the 12-digit number that’s on the green new keeper slip, which is known as the V5C/2. This must be done straight away once you've purchased the car and before driving it home after purchase.

Your vehicle must be insured and - if it’s over three years old - have a valid MOT. These details are recorded electronically and can be checked by the DVLA, so there’s no need to send in any documents when you tax your car online.

If you decide to pay for your car tax at a Post Office, then you may need your MOT certificate.

How much does it cost to tax a car?

For vehicles registered from 1 April 2017, only zero-emission cars are exempt under the latest car tax rules, meaning that fully electric cars are the only ones that currently qualify. In their first year, cars are taxed at different rates, rising to a maximum of over £2,000 for cars emitting more than 256g/km CO2.

In their second year, all cars are taxed at a flat rate of £145. In addition, from their second year, cars costing more than £40,000 will be liable for an annual additional charge for five years of £310. However, zero-emission vehicles are exempt from these charges.

Car tax rates for cars registered between 31 March 2001 and 1 April 2017 are determined by the amount of carbon dioxide that a car emits, measured in grams per kilometre (expressed as g/km CO2). Rates range from £0 for cars emitting less than 100g/km CO2, to more than £600 for those emitting more than 255g/km.

For cars first registered before 1 March 2001, the rates are based on the size of the engine. If your car’s engine is smaller than 1549cc, the rate is £170 per year. If it’s larger than 1549cc, the rate is £280 per year.

How is car tax recorded?

The old tax disc system was scrapped back in 2014. Now, the only record of your car being taxed is on an electronic database. You can check the details online, but there’s no reminder on your windscreen of when your car needs to be taxed.

Car tax is also no longer transferred with a used car when it is sold or changes ownership - even if it’s registered to another family member.

It expires as soon as you notify the Driver and Vehicle Licensing Agency (DVLA) that the car has changed hands. You need to do this so the vehicle’s ownership documents are updated. Any full months of unexpired tax should be refunded to you, with a cheque sent to the previous registered address of the car. If the new owner doesn’t tax the car themselves, then they could be fined up to £1,000.

 

Read more about:

Latest car buying advice

  1. Car finance eligibility checker

  2. How to get finance for a van

  3. How to get van finance with no deposit