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Vehicle Excise Duty

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Vehicle Excise Duty (VED) also known as vehicle tax, car tax and road tax is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used (or parked) on the 'public roads' in the United Kingdom.[1] A vehicle licence (tax disc) is given as proof of having paid the tax, and should be displayed on the vehicle. The tax is collected and enforced by the Driver and Vehicle Licensing Agency (DVLA).

A registered vehicle that is not being used on the road, and which has been taxed since 31 January 1998, must complete a Statutory Off Road Notification (SORN). Excise duty on road vehicles was first introduced in the 1888 budget and a new excise duty specifically for motor vehicles was introduced in 1920 which was paid into the Road Fund and was hypothecated for road construction. Since 1937 the money has gone into central government revenues and has not been used directly to fund road building or maintenance.

The government revenue from VED was £5.63 billion in 2009.[2]

Current regulations

All vehicles used or kept on the public road are required to display a non-transferable vehicle licence ("tax disc"). The licence is issued upon payment of the appropriate VED amount (which may be zero). Owners of registered vehicles which have been licensed since 31 January 1998 and who do not now wish to use or store a vehicle on the highway are not required to pay VED, but are required to submit an annual Statutory Off-Road Notification (SORN).[3] Failure to submit a SORN is punishable in the same manner as failure to pay duty and display a tax disc when using the vehicle on public roads.

If you have paid for vehicle tax by phone or online before the current disc runs out, then you can legally drive or keep your vehicle on the road whilst displaying the tax disc that has run out, for up to 5 working days (giving time for your new tax disc to arrive by first class post).[citation needed]

Charges

Charges as applicable from 1 April 2010. For vehicles registered on or after 1 March 2001 charges are based on theoretical CO2 emission rates per kilometre. The 'first year rate' only applies in the year the vehicle was first registered and is said by the government to be designed to send "a stronger signal to the buyer about the environmental implications of their car purchase":[4]

Emission band Cost (£) Cost for first year
Band A (up to 100g/km) 0 0
Band B (101-110g/km) 20 0
Band C (111-120g/km) 30 0
Band D (121-130g/km) 90 0
Band E (131-140g/km) 110 110
Band F (141- 150g/km) 125 125
Band G (151 to 165g/km) 155 150
Band H (166 to 175g/km) 180 250
Band I (176 to 185g/km) 200 300
Band J (186 to 200g/km) 235 425
Band K (201 to 225g/km) 245 550
Band L (226 to 255g/km) 425 750
Band M (Over 255g/km) 435 950

Charges as applicable from 1 April 2010. For vehicles registered before 1 March 2001 the excise duty is based on engine size:[4]

Engine capacity Cost (£)
<=1549cc 125
>1549cc 205

Rates for all other vehicles vary from £15 for motorcycles with an engine capacity not over 150cc, up to a maximum of £1,850 for the largest heavy goods vehicles (HGVs). (Special rates apply to HGVs not used commercially).

Exempt vehicles

Various classes and uses of vehicle are provided with a tax disk without charge.

Vehicles constructed before 1 January 1973 are eligible for a free vehicle licence under "classic car" legislation. This is due to the age of the vehicle and a presumption of limited mileage. Initially this was a rolling exemption applied to any vehicles over 25 years old, however the cutoff date was frozen in 1997. The change to "pre-1973" was unpopular in the classic motoring press, and a number of classic car clubs are campaigning for a change back to the previous system.[5] In 2006 there were 307,407 vehicles in this category:[6]

Other exempt vehicle (broadly in descending order of total number) include:

  • Vehicles registered to disabled people (1.12 million vehicles).[7]
  • Emergency vehicles (includes police cars, fire-engines, and ambulances and other health-service vehicles).[8]
  • Vehicle registered to ex-soldiers who are in receipt of war pensioners’ mobility supplement (18,340 vehicles).[9]
  • Band A cars (306 vehicles in 2006, but rising fast).[10]
  • Ministerial cars.[11]
  • Vehicles operated by the Government Car and Despatch Agency.[citation needed]
  • Cars imported by members of foreign armed forces.[12]
  • Road construction vehicles.[13]
  • Agricultural, horticultural and forestry vehicles[14]
  • 'Crown vehicles' for the use of Queen Elizabeth II and other members of the royal family.[15]

Enforcement

See also: Traffic enforcement camera

The police have powers to tow or clamp any vehicles a police officer or PCSO sees, that is unlicensed on a public road.[citation needed]

In 2008 it was revealed that a million drivers are exploiting loophole in Vehicle excise duty payments which had lost £214 million in revenue during 2006, mainly by vehicle owners missing a month's payment on each renewal.[16] It was estimated that 6.7% of motorcycles were not taxed in 2007. Since then better systems have reduced the loss to an estimated £34 million in 2009/2010.[17]

Automatic number plate recognition (ANPR) systems are being used to identify untaxed, uninsured vehicles and stolen cars.[18][19]

Rates since April 2005

All rates are in pounds sterling.

2005–06[20] 2006–07[20] 2007–08[21] 2008–09[22] 2009–10[23] 2010–11[23]
Petrol Diesel
Engine size of vehicles registered before 1 March 2001
<=1549cc 110 110 110 115 120 125 125
>1549cc 170 175 175 180 185 190 205
CO2 emissions of vehicles registered on or after 1 March 2001
Band A (up to 100g/km) 65 0 0 0 0 0 0
Band B (101–110g/km) 75 40 50 35 35 35 20
Band C (111–120g/km) 75 40 50 35 35 35 30
Band D (121–130g/km) 105 100 110 115 120 120 90
Band E (131–140g/km) 105 100 110 115 120 120 110
Band F (141–150g/km) 100 100 110 115 120 125 125
Band G (151–165g/km) 125 125 135 140 145 150 155
Band H (166–175g/km) 150 150 160 165 170 175 180
Band I (176–185g/km) 150 150 160 165 170 175 200
Band J (186–200g/km) 165 190 195 205 210 215 235
Band K (201–225g/km) 165 190 195 205 210 215 245
Band L (226–255g/km) 165 210 215 300 400 405 425
Band M (over 255g/km) 165 210 215 300 400 405 435

Other terms in common use

The terms "car tax", "road tax" and "vehicle tax" are commonly used when referring to "Vehicle Excise Duty".[24] Road tax has an entry in the Oxford English Dictionary.

Some cyclists, cycling organisations and cycling publications in particular object to use of 'road tax'. Peter Walker, a journalist at The Guardian explains "I've always felt the road tax argument supports a more general feeling of entitlement among too many drivers. Those who trot it out often seem to genuinely treat cyclists like we're interlopers who should be pushed aside".[25] The Cyclists' Touring Club argue 'most adult cyclists do pay for the roads, even though they impose minimal wear and tear on them'.[26] The Cambridge Cycle Campaign suggested that "Arguing that cyclists therefore have less right to use the roads is like arguing that smokers should take precedence for medical treatment, because non-smokers don't buy cigarettes and therefore 'don't pay hospital tax".[27]

The direct use of taxes collected from motorists to fund the road network was opposed by Winston Churchill predicted "It will be only a step from this for them to claim in a few years the moral ownership of the roads their contributions have created".[28]

A single issue campaign, 'I pay road tax' started by a cycling journalist in 2009 to challenge the use of the term 'road tax'.[29][30] The campaign has received support from Edmund King, President of The AA.[31]

In a BBC report on Look East in May 2010 about a cyclist who was knocked off his bike by a car the presenter read out a series of emails from viewers expressing the view that 'cyclists should pay road tax' if they wish to use the roads. After receiving a 'huge number' of complaints from viewers following publicity created by iPayRoadTax, the BBC broadcast a second piece which clarified the fact that roads are paid for out of general taxation and reported the incorrect[32][33] assertion that 'road tax as such does not exist'.[34]

When challenged by iPayRoadTax, Which?, the British consumer magazine, defended its continued use of the term on the basis that "road tax" was more commonly used than Vehicle Excise Duty. A spokesman also said that while they would not stop using the terms 'car tax' and 'road tax' online that they would endeavour to also make appropriate reference to the full name of the tax.[35]

History

Following the 1888 budget, two new vehicle duties were introduced — the locomotive duty and the trade cart duty (a general wheel-tax also announced in the same budget was abandoned). The locomotive duty was levied at £5 (£Error when using {{Inflation}}: |end_year=2,024 (parameter 4) is greater than the latest available year (2,023) in index "UK". as of 2024),[36]for each locomotive used on the public roads and the trade cart duty was introduced for all trade vehicles (including those which were mechanically powered) not subject to the existing carriage duty, with the exception of those used in agriculture and those weighing less than 10 cwt-imperial, at the rate of 5s. (£0.25) per wheel.[37][38]

In the budget of 1909, the then Chancellor of the Exchequer, David Lloyd George announced that the roads system would be self financing,[39] and so from 1910 the proceeds of road vehicle excise duties were dedicated to fund the building and maintenance of the road system.[40]

The Roads Act 1920 required councils to 'register all new vehicles and to allocate a separate number to each vehicle' and 'make provision for the collection and application of the excise duties on mechanically-propelled vehicles and on carriages'. The Finance Act 1920 introduced a 'Duty on licences for mechanically propelled vehicles' which was to be hypothecated and paid into a newly established Road Fund.[41] Excise duties specifically for mechanically propelled vehicles were first imposed in 1921, along with the requirement to display a vehicle licence (tax disc) on the vehicle.[40]

The accumulated Road Fund was never fully spent on roads (most of it was spent on resurfacing, not the building of new roads), and became notorious for being used for other government purposes, a practice introduced by Winston Churchill, when Chancellor of the Exchequer.[citation needed] Hypothecation came to an end in 1937 under the 1936 Finance Act, and the proceeds of the taxes were paid directly into the Exchequer. The Road Fund itself, funded by government grants wasn't abolished until 1955.[39]

Since 1998, owners of registered vehicles not using the public roads have been required to submit an annual Statutory Off-Road Notification (SORN).[42] Failure to submit a SORN is punishable in the same manner as failure to pay duty and display a tax disc when using the vehicle on public roads.

In June 1999, cheaper car tax was introduced for cars with an engine capacity up to 1100cc.[43] The cost of 12 months tax for cars up to 1100cc was £100, and for those above 1100cc was £155.

In the pre-budget report of 27 November 2001 the Government announced that VED for HGVs could be replaced, by a new tax based on distance travelled, the Lorry Road-User Charge (LRUC).[44] At the same time, the rate of fuel duty would be cut for such vehicles. As at the start of 2007 this scheme is still at a proposal stage and no indicated start date has been given.

The primary aim of the change is that HGVs from the UK and the continent pay exactly the same to use British roads (removing the ability of foreign vehicles to pay no UK tax). However, it is also expected that the tax will be used to influence routes taken (charging lower rates to use motorways), reduce congestion (by varying the charge with time of day), and encourage low emission vehicles.

In tax year 2002–2003, it is estimated that evasion of the tax equated to a loss to the Exchequer of £206 million. In an attempt to reduce this, from 2004 an automatic £80 penalty (halved if paid within 28 days) is issued by the DVLA computer for failure to pay the tax within one month of the expiry of the previous tax disc. A maximum fine of £1,000 applies for failure to pay the tax, though in practice fines are normally much lower.

In March 2005, graduated vehicle excise duty (GRAD VED) was introduced as an incentive to purchase vehicles with low emission levels.

In June 2005 the government announced plans to adopt a similar road user charging scheme for other road vehicles, which would work by tracing the movement of all vehicles using a telematics system. The idea raised immediate objections on civil and human rights grounds that it would amount to mass surveillance. An online petition protesting this was started and reached over 1.8 million signatures by the closing date of 20 February 2007.

Since 1 September 2008, the DVLA have stated: "If you pay your vehicle tax by phone or online before the current disc runs out, then you can legally drive or keep your vehicle on the road whilst displaying the tax disc that has run out, for up to 5 working days (Giving time for your new tax disc to arrive by first class post)."

In April 2009 there was a reclassification to the CO2 bandings with the highest paying £455 per year and the lowest £0, the bandings have also been backdated to cover vehicles registered on or after 1 March 2001, meaning that vehicles with the highest emissions registered after this date pay the most. Vehicles registered before 1 March 2001 will still continued to be charged according to engine size, above or below 1549cc.

In 2009 a consultation document from the Scottish Government raised the possibility of a road tax on all road users including cyclists, but there was a strong consensus against this.[45][46]

From 2010 a new first year rate is to be introduced - dubbed a showroom tax. This new tax was announced in the 2008 budget, and the level of tax payable will be based on the vehicle excise duty band, ranging from £0 for vehicles in the lower bands, up to £950 for vehicles in the highest band.[47][48]

See also

References

  1. ^ "The road user and the law". Direct.gov.uk. Most of the provisions apply on all roads throughout Great Britain, although there are some exceptions.
  2. ^ United Kingdom National Accounts: The Blue Book (Report). Office for National Statistics. 2010.
  3. ^ How to make a SORN (Statutory Off Road Notification) : Directgov - Motoring
  4. ^ a b "The cost of vehicle tax for cars, motorcycles, light goods vehicles and trade licences". Direct Gov. Retrieved 22 October 2010.
  5. ^ "Classic Car VED Exemption". Your Government. Retrieved 6 September 2010.
  6. ^ "Motor Vehicles: Excise Duties". TheyWorkForYou. Retrieved 30 March 2010.
  7. ^ "Motor Vehicles: Excise Duties". theyworkforyou. Retrieved 30 March 2010.
  8. ^ "SCHEDULE 2 - Exempt vehicles". Fire engines etc.
  9. ^ "War Pensioner's Mobility Supplement". Hansard. Retrieved 30 March 2010.
  10. ^ "The cost of vehicle tax for cars, motorcycles, light goods vehicles and trade licences". DirectGov. Band A Up to 100g/km £0.00
  11. ^ "Official Cars: Taxation". Hansard. Retrieved 30 March 2010.
  12. ^ "SCHEDULE 2 continued".
  13. ^ "Exempt vehicles". OPSI. Retrieved 31 March 2010.
  14. ^ "Agricultural, horticultural and forestry vehicles exempt from vehicle tax". DirectGov. Retrieved 16 October 2010. Vehicles used solely for the purpose of agriculture, horticulture and forestry are exempt from vehicle tax; however, they still need to be taxed each year and display a 'nil duty' tax disc.
  15. ^ "CROWN VEHICLES AND EXEMPT VEHICLES". Legislation.gov.uk. Subject to regulation 29(2), for the purposes of identification, a certificate of Crown exemption shall be displayed on every vehicle belonging to the Crown which is used or kept on a public road.
  16. ^ "A million drivers are exploiting loophole in road tax payments". The Times.
  17. ^ "Vehicle excise duty evasion: 2009". Department for Transport.
  18. ^ John Lettice (15 September 2005). "Gatso 2: rollout of UK's '24x7 vehicle movement database' begins". The Register. Retrieved 14 October 2008.
  19. ^ Chris Williams (15 September 2008). "Vehicle spy-cam data to be held for five years". The Register. Retrieved 15 October 2008.
  20. ^ a b http://www.bytestart.co.uk/content/taxlegal/9_15/vehicle-excise-duty-rates-2006-7.shtml (2005–06 figures calculated from 2006-07 figures and changes)
  21. ^ http://www.bytestart.co.uk/content/taxlegal/9_15/vehicle-excise-duty-rates-2007-8.shtml
  22. ^ http://www.bytestart.co.uk/content/taxlegal/9_15/vehicle-excise-duty-rates-2008-9.shtml
  23. ^ a b http://www.bytestart.co.uk/content/taxlegal/9_15/ved-rates-2009-2011.shtml
  24. ^ "Which? prints 'road tax' error; won't correct it". BikeBiz. on Google analytics today, there are 1 million searches a month in the UK for the term 'car tax', 368,000 for the term 'road tax', 6,600 for the term 'vehicle excise duty' and 40,500 for 'VED'.
  25. ^ "Cyclists are not road tax dodgers". The Guardian. Retrieved 17 October 2010. I've always felt the road tax argument supports a more general feeling of entitlement among too many drivers. Those who trot it out often seem to genuinely treat cyclists like we're interlopers who should be pushed aside
  26. ^ "TEN COMMON QUESTIONS" (PDF). Q8: Cyclists don't pay road tax, so you have no right to complain about the roads or drivers, or to take up road-space, do you? A: Actually, most adult cyclists do pay for the roads, even though they impose minimal wear and tear on them. There are no calls for pedestrians to start paying "road tax", so why require it of cyclists?
  27. ^ "Frequently asked questions". Cambridge Cycle Campaign. 'Vehicle Excise Duty', its official name, goes directly into government coffers and does not 'pay for roads'. Arguing that cyclists therefore have less right to use the roads is like arguing that smokers should take precedence for medical treatment, because non-smokers don't buy cigarettes and therefore 'don't pay hospital tax'..
  28. ^ Plowden, William (1971). The Motor Car And Politics 1896–1970. London: The Bodley Head. p. 201. ISBN 0370003934. {{cite book}}: Cite has empty unknown parameter: |month= (help)
  29. ^ "Twitter inspires "I Pay Road Tax" cycling jersey". Bike Radar. Retrieved 13 October 2010.
  30. ^ "Cyclists are not road tax dodgers". The Guardian. Retrieved 17 October 2010.
  31. ^ "AA President applauds iPayRoadTax.com campaign". road.cc. Retrieved 13 October 2010. AA President Edmund King has given his backing to the iPayRoadTax.com initiative, applauding the website as a great example of online campaigning ... King's public support of the website, which seeks to dispel myths about 'road tax,' is testimony to the campaign's success.
  32. ^ "Road tax increase 'will hit 9.4m'". BBC. 10 July 2008. Retrieved 19 October 2010.
  33. ^ "Road tax to reflect carbon emissions". Guardian News and Media. 17 April 2010. Retrieved 19 October 2010.
  34. ^ "BBC backtracks on 'road tax' report". BikeBiz. Retrieved 13 October 2010. Look East revisits a report on cycling which contained viewer comments about "cyclists not paying road tax ...BBC Look East ran a news story about a Cambridge cyclist being knocked from his bike by an inattentive driver but did not mention any police action being taken. Instead, BBC TV reporter Kim Riley read out viewer comments which complained that cyclists "do not pay road tax". [dead link]
  35. ^ "Which? prints 'road tax' error; won't correct it". BikeBiz. When creating online content, it is very important users are able to find it, so we are often guided by such data. There would be little point us creating the most comprehensive guide to UK Vehicle Excise Duty if few people are searching for that term. So while I do not propose we will stop using the terms 'car tax' and 'road tax' online, I will endeavour to make sure these are used with the appropriate reference to the full name of the tax..
  36. ^ UK Retail Price Index inflation figures are based on data from Clark, Gregory (2017). "The Annual RPI and Average Earnings for Britain, 1209 to Present (New Series)". MeasuringWorth. Retrieved 7 May 2024.
  37. ^ "The speech of the Chancellor of the Exchequer". The Times. 27 March 1888.
  38. ^ "The Excise Duties (Local". The Times. 27 March 1888.
  39. ^ a b "Louise Butcher" (25 November 2008). "Vehicle excise duty (VED)". "House of Commons Library". {{cite journal}}: Cite journal requires |journal= (help)
  40. ^ a b "House of Commons Environmental Audit Committee" (22 July 2008). "Vehicle Excise Duty as an environmental tax". "The Stationery Office Limited". {{cite journal}}: Cite journal requires |journal= (help)
  41. ^ C.D. Buchanan (1958). Mixed Blessing: The Motor in Britain. Leonard Hill.
  42. ^ How to make a SORN (Statutory Off Road Notification) : Directgov - Motoring
  43. ^ : Budget Report 1999
  44. ^ "The Pre-Budget Report: Building a stronger, fairer Britain in an uncertain world" (Press release). UK HM Treasury. 27 November 2001.
  45. ^ Dynesh Vijayaraghavan (2009). "Cycling Action Plan for Scotland: Analysis of Consultation Responses" (PDF). Sustainable Transport Team, Scottish Government. p. 3.
  46. ^ "A road tax for cyclists On your bike". The Scotsman. 12 January 2010.
  47. ^ Robert Winnett (13 March 2008). "Budget 2008: Motorists suffer tax hits in 'green' budget". The Daily Telegraph. Telegraph Media Group. Retrieved 14 May 2008.
  48. ^ "Budget 2008 - motoring taxes". DirectGov. Retrieved 14 May 2008.

External links

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