This article is brought to you by the Money Advice Service.
When Christopher and Marianna Webb were trekking through the mountains and gorges of the Himalayas, little did they realise that their car, thousands of miles away in Battersea, had been towed away and impounded.
The Webbs had changed the ownership details for their cars – Mr Webb became the owner of Mrs Webb’s car and vice versa. What they didn’t realise was that new laws introduced in October 2014 meant that the ‘road tax’ (Vehicle Excise Duty, or VED) had been cancelled by the DVLA and the disc in the window was now invalid – . Like many car buyers in the last few months, the Webbs had fallen prey to a new rule which stops VED transferring when a vehicle changes hands. Before last October, a vehicle that had several months of tax left to run could be sold on and the VED could still be used for that period by the new owner. Now, however, the tax is cancelled as soon as the vehicle is sold and the DVLA refunds you for any unused months of registration.
Also as part of the new rules, tax discs are no longer issued and no longer need to be displayed in the windows of vehicles, with all records stored electronically.
What is Vehicle Excise Duty (VED)?
VED, commonly known as road tax, is a levy imposed on most vehicles on the roads. It is paid annually per vehicle, not per person, and the price primarily depends on the vehicle type and its CO2 emissions. The VED rate on a new car may be different from subsequent years, to make low-emission cars more attractive and high-emission cars less attractive.
A small, low-emission vehicle, and/or a vehicle powered electrically, might not cost anything in VED. As the CO2 emission of the vehicle rises, the VED rises. Vehicles are placed in one of 13 bands, starting at ‘Band A’ which is a CO2 emission level of up to 100g/km. These cars pay no VED at all.
The highest-paying band is M (over 255 g/km), which will likely be a car with a large, powerful petrol engine – like a supercar or large luxury saloon. If you’re thinking of buying a new car it’s worth checking the VED band beforehand as you might be surprised at the cost – band M cars, for example, are taxed over £1,000 in the first year and over £500 a year afterwards.
There are also several other conditions under which you may receive a discount or free VED entitlement – find out more from this guide.
Paying your VED
Payments can be made for 6- or 12-month terms, either electronically or at the post office. The car owner will be sent a V11 reminder form with a 16-digit reference number. Enter this online and an electronic check will automatically establish whether the vehicle is covered by an MOT, and that the form recipient is insured to drive it (if you do not complete the form electronically and instead renew at the post office you will need to take MOT/insurance forms with you. If you suspect a vehicle is not covered by VED, you can check , assuming you know its registration and make.
What if my car is off the road?
If you have a car that needs repairs, or that you want to keep but not drive such as a classic, then you will need to declare what is known as a SORN – a Statutory Off Road Notice. It’s a simple form that can be filled in online or at your local post office, and failing to fill it in under these circumstances could lead to a fine. Be warned, be sensible, and you won’t fall foul of the new rules.