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A quick guide to recent car tax changes

Get up to speed with the new rules about car tax

a crumpled up car tax badge on some paper

Just as we all get used to the fact that our car tax is no longer based on engine size, (unless your car is registered before March 2001) and we don't need to display a tax disc on our windscreen, the government introduce more car tax changes.

What is car tax?

Contrary to popular belief, car tax is not a tax to use the roads. There are plenty of people who legitimately use the roads and don't pay car tax. Instead car tax is a tax on car emissions. And its official name is Vehicle Excise Duty.

Who pays car tax?

Every vehicle owner should pay car tax, unless the vehicle they drive is exempt. Exemptions include:

  • Vehicles used by disabled people
  • Mobility scooters
  • Vehicles over 40 years old
  • Zero-emission electric vehicles
  • Steam vehicles, mowers and tractors

How do I find out when my car tax is due?

You can check if a vehicle is taxed and has an MOT on the government website. You just need to type in the vehicle's registration number.

Do the car tax changes apply to every car?

If your car was registered between 1 March 2001 and 31 March 2017, then the new car tax rules don't apply.

Your rate of vehicle tax will continue to be based on the fuel type and carbon dioxide (CO2) emissions and you'll pay the same amount each year, as long as your emissions don't increase.

Tax rates vary between £0 and £535 a year depending on how polluting your car is. A full breakdown of the car tax rates can be found on the website.

Tax rates vary between £0 and £535 a year depending on how polluting your car is.

Which cars are affected by the car tax changes?

The new rules apply to cars that are registered on or after 1 April 2017. So if you plan to buy a new car in the near future, you not only need to put car insurance in place before you collect it, but you'll need to tax it as well.

So what are the new car tax rules?

1. For the first year of registration, you'll pay a rate based on the car's CO2 emissions.

The amount you pay will depend on whether the car runs on petrol, diesel or an alternative fuel and how polluting its emissions are.

For the highest polluting cars, you could pay up to £2,000 car tax in the first year.

2. In the second year and each subsequent year, you pay a set rate depending on whether your car is run on petrol or diesel, alternative fuel or zero-emission electric.

Petrol or diesel - £140 a year

Alternative fuel - £130 a year

Zero-emission electric - £0 a year

3. New vehicles worth over £40,000 will be subject to an additional charge.

For five years after the first year of registration, there is an additional rate of £310 per year for vehicles worth over £40,000.

So, say you buy a car with a list price of £55,000 that runs on petrol and has CO2 emissions of 175g/km. In the first year you would pay £800 road tax, then for the next five years you'd pay £450 per year and after that, £140 per year.

Even if you buy a zero-emission electric car and it's worth over £40,000, you'll still need to pay £310 a year for five years from the second time the vehicle is due for tax.

And remember…

Since the paper tax disc was scrapped in October 2014, you can't sell your car with 'X number of months' left on the tax.

This is because the tax is no longer carried over to the new owner. It expires when you sell the car. Therefore, the new owner must tax the car before they drive away with it. If they don't, their car insurance won't be valid either.

When you tell the DVLA that you've sold the car, you'll get any outstanding tax back.

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