Taxing your car is a legal requirement. If you’re found to be driving on the road with no tax you could face a hefty fine. Years ago, you used to pay for your road tax and you’d receive a disc in the mail. The disc would tell you what dates your car is taxed from and when it ended, and then you would need to display it in your car window. It would be a constant reminder as to when your tax needed renewing but also let everyone know that your car was legal to be on the road. But now? It’s a different story.
What is road tax?
Road tax is your way of paying for the pollution you put into the atmosphere. Of course, you cannot remove the carbon emissions put into the air with your payment which is why the money is used in a number of ways. Including repairing the roads, building new ones and adding safety measures such as barriers, dropped kerbs and crossings.
Does every car pay road tax?
It’s important to note that not every car will pay tax. If you declare your car as SORN, it means that you are not driving it on the roads. It means that you do not need to have an MOT for it, or insurance, or, you guessed it, road tax. Road tax legally allows you to drive on the road, if you’re not driving you don’t need it. That being said, some cars apply for road tax but their bill comes to a grand total of £0.
As road tax is based on carbon emissions and pollutants, it’s no surprise that more eco-friendly cars aren’t paying any road tax. In fact, it’s one of the many positives and reasons that people are buying electric cars. There is a lot of debate surrounding whether electric vehicles will eventually end up paying road tax but for now, they’re categorised in a way that saves you a large bill!
What are the road tax categories?
The first time you tax your vehicle the rate will depend on how many CO2 emissions your car emits per kilometre. The more emissions, the higher the price will be. You might pay as little as £10 or as much as £2,365. We know, it’s a lot of money. There are options to pay monthly but it’s quite obvious. If you haven’t got deep pockets, the last thing you want to be doing is purchasing a car that produces a lot of carbon emissions.
During the second year of taxing you will notice a change in cost. They used to vary depending on the make and model of your car but they’re more standard these days. It depends on how you pay, whether that’s by direct debit or not, in monthly instalments or in a lump sum. You’ll pay less than £200 in total, no matter how you choose to pay.
There is also the small issue of a list price. If your car’s list price value is more than £40,000 you will need to pay an additional fee for five years after the second time the car is taxed. This is £355 a year. If you’re unsure about what your tax is you can check with your car manufacturer before purchasing or alternatively check on the GOV website.
How to find out if my car is taxed
Remember how we mentioned earlier that the tax disc no longer exists? Well, that means your visual reminder of when your tax is due is also gone. Luckily if you completed your previous tax year with the correct information, you’ll receive a reminder when the time comes for you to renew it.
But if like us, you enjoy planning ahead then it can be a little uncomfortable sitting around and waiting for a letter to say you’re up for renewal. In which case you can log onto the GOV website. It will tell you the exact date when your road tax is up for renewal. You can then pop this in your phone’s calendar or a post-it note on the accounts book so that it’s easily accessible and you can see the payment coming.
How can you pay your road tax?
There are a number of ways to pay your road tax but possibly the most important one to take note of is whether you pay it in one full amount or in monthly installments. As with most payment plans, it certainly benefits you to pay it all at once. You will pay a little more if you pay in installments, roughly another £10 or so. So it’s nothing dramatic, if you can’t afford to pay a large lump sum, it’s nothing to stress about. Just opt for the monthly direct debit.
The second is whether you want to pay for 6 months or 12 months. With the cost of living crisis at the minute, it may make more financial sense to go for a 6-month option. In a few months’ time, you may decide that you want to get rid of your car and paying in full upfront for 12 months might be frustrating.
What will happen if I don’t pay my car tax?
As we mentioned earlier, it is a legal requirement to pay your road tax. If you don’t you can receive a fine of £80 however this can be reduced to £40 if you pay it within the first 30 days. In our opinion, £80 is a pretty hefty bill for a typical £165 annual bill. Not paying the fine can lead to it being passed onto a debt collection agency and ending up in court. We’d rather not run the risk and have £15 come out of our bank accounts each month.
At first, road tax can seem like an overwhelming cost, but it’s less than your phone bill and nearly as little as a Netflix subscription. So don’t skip out on it. Set it up to leave your account automatically, don’t run the risk, and take note of when it is due so you don’t end up missing your renewal date.
