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What Is Vehicle Tax and Do I Need To Pay It?

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You’ve passed your test, you’ve found a car, now you just need to get all the paperwork sorted. Aside from finding suitable insurance and making sure your car is road-safe with an up-to-date MOT, you may also need to pay vehicle tax.


What is vehicle tax?

If your car is registered, you will need to pay tax. This will cover the vehicle for 12 months. You’ll then pay vehicle tax every 6 or 12 months at a different rate. Even if you’re not using your car, if it’s registered you will need to pay tax.


Why am I paying tax?

You may wonder why you have to pay tax, especially when cars can already be expensive to buy. Well, the amount of tax you pay will depend on your vehicle’s CO2 emissions. The good news is that this means you have some level of control over how much you pay. By choosing your vehicle carefully you could even drive your car tax-free.

Currently, you are exempt from paying car tax if you own a fully electric vehicle.


What is my car tax band?

Unfortunately some diesel cars have a higher tax rate. This is because they don’t meet the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions. Not sure how much tax you need to pay for your car model? You can always get in touch with your manufacturer to ask specific questions such as whether your car meets the RDE2 standards.

Car tax can be anything up to £1,000 or more a year, depending on how environmentally-friendly the car is. To check whether your car needs to be taxed, you can use this free car tax checker. The tool will let you know if your car has been taxed and when it’s next due to be taxed.

For cars registered before 1 March 2001 the rate of vehicle tax is calculated according to engine size. If your car was registered after 1 March 2001 your tax band will be based on your vehicle’s CO2 emissions.


How do I pay car tax?

Once you’ve checked when your car needs to be taxed, we recommend putting a note in your calendar. You can also set up a Direct Debit for your car tax which will renew automatically.

You can choose to pay your car tax with the following options:

  • Annual lump sum
  • Six-monthly lump sum
  • Monthly instalments via Direct Debit

Failure to pay tax could result in a fine.


We hope this guide has cleared up all your main questions about car tax. We recommend factoring this into your overall car budget. For more information visit the GOV.UK website.

At GoGoGo we like to prepare our students to pass their driving test and everything that comes with being a responsible driver. We have a wealth of essential articles on a range of topics to help you pass your test first time and inform you on how to buy a car and get it ready for the road. Looking for a Driving School Peterborough? We offer an intensive 5-day course to get you ready for the road.

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