At a time when bills are on the rise, it is important that we all save money wherever we can. Running a car is undoubtedly essential for many of us, but it is also a serious financial commitment. If you are buying a new to you car, you can make some serious savings if you think carefully about the ongoing, fixed costs such as insurance and tax.
A brief history of car taxing
Taxing road users has been a common practice in the UK for over 400 years, when Hackney Carriages had to pay a road tax. However, the system has evolved over the past century:
- 1921 the tax disc was introduced
- 1937 the old road tax system was replaced with Vehicle Excise Duty (VED), or road tax, which was collected by Local Authorities
- 1974 collection of car tax was transferred to the newly established, DVLC (Driver and Licensing Vehicle Centre) in Swansea
- 1990 the DVLC became an Executive Agency of the Department of Transport and was renamed the DVLA (Driver and Vehicle Licensing Agency).
- 2014 the paper tax disc was phased out and an electronic register was introduced.
Today, VED is a valuable source of income, bringing in £5.6 billion per year. Although some of our car tax may be spent on road maintenance and infrastructure, the payments are placed into a central pool, which means that they could be spent on other essential services, such as healthcare.
Who has to pay car tax?
Every car is subject to tax, except: vehicles used by someone who is registered disabled; disabled passenger vehicles; mobility scooters, invalid carriages and powered wheelchairs; vehicles which are more than 40 years old on 1st January of the current year; steam vehicles; electric vehicles; mowing machines and any other vehicles used for forestry, farming or gardening.
How is tax monitored
Unsurprisingly for such a valuable income stream, vehicle tax is monitored to ensure that everyone pays what they are supposed to. The system also helps to make sure that vehicles are kept in safe working condition as it is not possible to tax a vehicle unless it has an in-date MOT test.
Pre-2014, car tax was monitored in the first instance by a visual check of the tax disc; failure to display a valid disc in the bottom right-hand corner of the windscreen was an offence. Today, however, the system is monitored via an electronic database, with untaxed cars being picked up by ANPR (automatic plate recognition cameras) either operated by a police car or installed on busy roads.
Selling a vehicle
If you sell a car and you still have some tax remaining, you can’t transfer the payment to the new owner; they must get tax themselves and the DVLA will refund you for the remainder of the 12-month period.