Car Tax
Under UK law almost every car that is on the road must pay car tax which is sometimes called road tax or Vehicle Excise Duty (VED. There have been numerous of changes to the car tax system and there are further changes that will be implemented.
Other forms of car taxes can also be incurred through other ways such as fuel duty, council parking charges and congestion charges.
It is usually thought that the car taxes fund things like roads and other transport infrastructures, but it is not entirely easy to track the spending of the taxes related to cars.
Types of car tax
The most common form of tax associated with cars is the car tax and the tax disc that comes with it. It is law that the tax disc must be displayed in the windscreen on the passenger side of every vehicle that is taxed.
Every vehicle registered in the UK must be taxed if used or kept on a public road. If a vehicle is not on the road it must either be taxed or have a Statutory Off Road Notification (SORN) in force. If a vehicle is found not to be taxed correctly it could be clamped or removed by the authorities. There is also a maximum penalty of £200 for failing to display a current tax disc. It is also the case that tax discs cannot be transferred between vehicles, even if the vehicles are the same type and would be taxed the same.
New car tax
There is a new car tax cost for new cars in their first year. Buyers of new cars must pay a one off first year “showroom tax”. This means buyers can to pay up to £1,000 in the first year of cars with high emissions. People that buy a new car with emissions lover than 130g/km of CO2 will pay nothing in the first year.
“Showroom tax” is a way of taxing new cars that are more polluting than others. The higher tax is to try and deter people from buying cars that are more polluting than others.
Vehicles registered before 1 March 2001
Vehicles that are registered before 1 March 2001 are taxed on their engine size alone. There are 2 different taxes on the engine size, engines below 1549 CC and above 1549CC meaning there are only 2 tax rates for cars registered before 1 March 2001.
CO2 tax
Vehicles that are registered after the 1 March 2001 are taxed on their CO2 emissions rather than on the engine size. This means there are a number of different tax bands that vehicles can fit into, depending on how much CO2 the vehicle emits. This means car tax can vary depending on when the car is registered, the size of the engine or the amount of CO2 emissions.