As if there weren’t enough costs that came with buying a vehicle, another one people often forget to include is paying for vehicle tax.
Car tax is compulsory for any vehicle on the road in the UK, and if your vehicle isn’t on the road then you will need to ensure you have declared it SORN (Statuary Off Road Notification) instead. Without valid tax on your vehicle you could face a fine of up to £1000. But there are several things you need to be aware of when it comes to purchasing tax to make sure you aren’t left with the nasty shock of a large payment. You can view a comprehensive guide by visiting this link.
What is VED?
Another name for car tax is Vehicle Exercise Duty, and this is the tax that most vehicles on the roads in the UK must pay. The money spent by drivers on tax is usually put towards government development of roads and transport across the country.
There are several different factors that affect the amount you pay on vehicle tax, with the most important being how environmentally friendly your car is. Any vehicle that has been registered after 2001 pays tax based on its CO2 emissions, which means that diesel drivers often have a hefty sum to pay.
On the other hand, drivers using a fully electric vehicle will not have to pay tax as they create zero emissions. Additionally, vehicles more than 40 years old also do not have to pay car tax, regardless of the negative impact they may have on the environment.
Buying a vehicle after 1 st April 2017
In recent years, there have been changes to the system. If you buy a vehicle that has been registered after the 1 st of April 2017 then the first year you will pay car tax based on the vehicle’s CO2 emission. From then on, you will be paying a flat rate of £145 if you have a petrol or diesel vehicle, and £135 if you drive a hybrid vehicle.
It is also important to note that if you purchase a vehicle that has a value over £40,000 then the flat rate after the first year rises to £320 and continues at this rate for 5 years. Be cautious, as even if you are given a discount at the dealership and the price of the vehicle drops below £40,000, you will still have to pay the higher sum on the car tax.
Vehicles registered before 1 st March 2001
Additionally, there are also differences in payment if your vehicle was registered before the 1 st of March 2001. Any vehicle manufactured before this date has a much easier taxation system and cost is measured on the size of the engine. For example, if your engine size is below 1549cc then you pay £155 a year, anything above then you are charged £255.
Buying and selling a vehicle
When buying or selling a car, the tax cannot be transferred over, it’s as simple as that. One things that often proves difficult is buying a vehicle, as you are unable to drive until you have taxed it. This means you’ll have to tax it yourself before driving off.
When it comes to selling a vehicle, you will need to notify the DVLA and send them the relevant part of your V5C (logbook) or you could face a fine of up to £1000. When this process has been completed, any outstanding money that has been paid on the tax will be refunded, or if you pay by direct debit, the payments will be stopped.