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Car tax changes: What do you need to know?

Car tax changes introduced in 2014 affected more than just the tax disc — find out what car buyers and sellers need to know.

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Since October 2014, cars are no longer required to display a tax disc. But if you’re selling your car or buying a used vehicle, there’s more you need to know.

What car road tax changes have been introduced?

Cars have been subject to vehicle excise duty (known as car tax or road tax) and required to display a valid tax disc since 1921. But in October 2014, the DVLA scrapped the paper tax disc in favour of an automatic number plate recognition system.

The end of the tax disc does not spell the end for car tax — drivers will still be subject to road tax costs of £20 to £490 per year based on vehicle emissions. Some cars are exempt from road tax, including electric and extra low emission vehicles, cars used by disabled drivers, classic cars over 40 years old, and cars that are declared off-road with a statutory off-road notice (SORN). You can find out how much vehicle tax you have to pay here.

Alongside the road tax disc changes, the DVLA also introduced new rules regarding the transfer of road tax when new or used cars are sold. Car road tax is no longer transferable with the sale of any new or used car, and will automatically expire when the car changes ownership.

So how do these car road tax changes affect you?

Selling your car

In the past, sellers could make some extra cash out of a car sale if the vehicle still had a few months’ tax on it — this is no longer the case as the tax will automatically expire as soon as the car is sold. To avoid misleading any potential buyers, you should no longer advertise your car as taxed, even if you still have a tax disc with a future date on it.

The new rules don’t mean you’ll lose out on tax you’ve already paid when you sell your car — you’ll automatically be refunded any full months tax remaining once the ownership of the car has transferred (or if the car has been scrapped or declared off-road). If you paid a surcharge for buying 6 months’ tax, this extra fee isn’t refundable.

Road Tax Changes - Taxing new or used cars

Buying a used car

When buying a used car, make sure you don’t fall for any sellers’ claims that the vehicle is taxed. Even if you buy a car with an in-date tax disc, this will now be invalidated as soon as you take ownership of the car.

As well as insuring your car, now you must also make sure you tax it before you drive it away. You can do this using the new keeper supplement on the V5C (logbook), which you should receive from the seller as part of the transaction. Once you have the 12-digit reference number you can tax the car immediately by phone or online — the service is available 24 hours a day, seven days a week. Alternatively you may decide to pay a deposit in exchange for the new keeper supplement, then tax and insure your new vehicle before returning to collect the car at a later date.

How to tax a car

The DVLA’s car tax system is designed to make it as quick and easy as possible to tax your vehicle, whether you’ve just bought the car or are renewing your tax.

To tax your car online, visit the car tax page and follow the instructions. It should take just a few minutes and your car tax will be valid instantly. Alternatively, you can call the automated phone service on 0300 123 4321 or visit a Post Office branch to renew or buy car tax.

To tax your car, you will need the 11-digit reference number from your V5C or your reminder letter if you’re the registered owner. If you’ve just bought the vehicle, you’ll need the 12-digit number on the new keeper supplement.

You can choose to pay for your car tax upfront for 12 months or 6 months, or there’s a new option to pay monthly by direct debit for a full year’s tax.

Once you’ve taxed your car, don’t forget to search for a better deal on your car insurance. Get started by comparing with uSwitch below.

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