Navigating Car Tax: A Beginner’s Guide

Car tax: A road trip through time!

Car tax, officially called VED (Vehicle Excise Duty), has been around since 1937. The money collected by the DVLA goes towards keeping our roads in tip-top shape, just like a pothole-filling superhero.

Here's the key thing: the amount of car tax you pay depends on a few things (like how clean your car is and how old it is). This means that choosing a car in a lower tax band can save you cash in the long run, and might even make it more attractive when you decide to sell it someday!

How is Car Tax Calculated?

What Does Car Tax Cost?

Who’s Exempt From Road Tax?

Paying Your Car Tax

Declaring Your Car Off-Road

Selling Your Car?

Find Your Perfect Car With Marsh Finance’s Extensive Marketplace

How Is Car Tax Calculated?

Figuring out your car tax in the UK can feel like a puzzle, but it really just depends on three things:

• How old is your car? We're looking at the date it was first registered, not necessarily when you bought it (especially for used cars). This date is on your V5C registration document.
• How clean is it? This refers to how much CO2 the car releases (measured in grams per kilometer, or g/km). You'll also find this information on your V5C.
• What kind of fuel does it use? Is it petrol, diesel, electric, or something else?

Here's a quick tip: The exact amount of car tax you'll pay depends on these factors. To get a specific number, you can use an online car tax checker!

• Cars Registered Before March 1, 2001: Tax is based on engine size, with two rates depending on whether it’s under or over 1549cc.
• Cars Registered Between March 1, 2001, and March 31, 2017: The tax rate is based on fuel type and CO2 emissions.
• Cars Registered After April 1, 2017: In the first year, the tax is based on fuel type and CO2 emissions. Subsequently, it’s based solely on fuel type.

What Does Car Tax Cost?

Car tax: Don't let the name fool you!

While car tax sounds simple, it can be a bit tricky at first. Here's the gist:

• The cost depends on your car: Newer cars (registered after April 2017) are taxed based on how clean they are (emissions) and what fuel they use (petrol, diesel, etc.). The cleaner and more fuel-efficient, the cheaper the tax. Diesel cars generally cost more in tax.
• First year is different: For newer cars, the first year's tax can range from free to £2365! After that, it gets cheaper (around £155-£165 per year).
• Older cars have simpler rules: Cars registered before 2001 are taxed based on engine size - smaller engines mean less tax. Cars registered between 2001 and 2017 are taxed based on emissions.
• Fancy cars pay extra: If your car cost over £40,000 (and isn't electric), you'll pay an extra £355 per year for the first five years.

Remember: The government website has a full breakdown of tax bands if you want to dive deeper (https://www.gov.uk/vehicle-tax).

Who’s Exempt From Road Tax?

Certain vehicles are exempt from road tax:

• Electric Vehicles: Must be powered externally or by an electric storage battery.
• Disability Vehicles: Includes mobility scooters and powered wheelchairs.
• Classic Cars: Vehicles over 40 years old.
• SORN Vehicles: Declared off-road with a Statutory Off-Road Notice.
• Agricultural Vehicles: Used only on private land.

Paying Your Car Tax

You can pay car tax online, via Direct Debit, or at the Post Office. Payment methods include annual lump sums or more manageable instalments with a 5% surcharge.

Consequences Of Not Paying Car Tax

Failure to pay leads to penalties, including fines and potential court action. The DVLA employs various measures to enforce compliance.

Declaring Your Car Off-Road (SORN)

If you’re not using your car, declare it off-road with a SORN. This exempts you from paying tax, provided the vehicle isn’t used or parked on public roads.

Selling Your Car?

Sold your car? Great! But don't forget about the car tax.

Here's the deal: you can get money back for any full months of tax you haven't used. Car tax isn't like a gym membership you can pass on to someone else, so you need to let the DVLA (basically the car people in the UK) know you sold the car. Once they know, they'll automatically send you a refund for those unused months.

Find Your Perfect Car With Marsh Finance’s Extensive Marketplace

Navigating car tax is just one piece of the car ownership puzzle. If you’re in the market for a new vehicle, Marsh Finance is here to help. Our extensive car marketplace offers a vast selection of vehicles from across the UK, ensuring you find the perfect match for your needs and budget.

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