Vehicle excise duty
Encyclopedia
Vehicle Excise Duty (also commonly known as vehicle tax, car tax and road tax) is a vehicle road use tax
Road tax
Road tax, known by various names around the world, is a tax which has to be paid on a motor vehicle before using it on a public road.-Australia:...

 levied as an excise duty which must be paid for most types of vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....

 which are to be used (or parked) on the public roads in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

. Vehicles used on public roads should display a current vehicle licence
Vehicle licence
A valid vehicle licence is required by law in some countries to be displayed on any registered motor vehicle if it is to be used or kept on a public road.-Worldwide:...

 (tax disc) as proof of payment which will not be issued without prior proof that the vehicle has valid MOT and insurance. A Statutory Off Road Notification (SORN) must be made for a registered vehicle that is not being used on the road, and which have been taxed since 31 January 1998.

VED, which raised in 2009, is collected and enforced by the Driver and Vehicle Licensing Agency
Driver and Vehicle Licensing Agency
The Driver and Vehicle Licensing Agency is the organisation of the UK Government responsible for maintaining a database of drivers and a database of vehicles in Great Britain; its counterpart in Northern Ireland is the Driver & Vehicle Agency...

 (DVLA). Vehicle tax was introduced in the 1888 budget and the current system of excise duty applying specifically to motor vehicles was introduced in 1920. This excise duty was ring-fenced
Hypothecation (taxation)
The hypothecation of a tax is the dedication of the revenue from a specific tax for a particular expenditure purpose. Hypothecation is the pledging of assets....

 for road construction and was paid directly into a special Road Fund
Road Fund
The Road Fund was a British Government fund designated to pay for the building and maintenance of the United Kingdom road network. Its income came originally from vehicle excise duty, until that ceased to be hypothecated for roads use in 1936, and then from government grants...

 from 1920 until 1937 after which it was treated as general taxation. Even during this period the majority of the cost of road building and improvement came from general and local taxation due to the tax being too low for the upkeep of the roads.

Current regulations

Most motor vehicles used or kept on the public road are required to display a non-transferable vehicle licence
Vehicle licence
A valid vehicle licence is required by law in some countries to be displayed on any registered motor vehicle if it is to be used or kept on a public road.-Worldwide:...

 ("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). 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).

Cars

Charges as applicable from 1 April 2011. For cars registered before 1 March 2001 the excise duty is based on engine size (£130 for vehicles with a capacity of less than 1549cc, £215 for vehicles with larger engines). 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". Charges as applicable from 1 April 2011 are:
Car emission band Cost (£) Cost for first year (£) Notes
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) 95 0
Band E (131-140g/km) 115 115
Band F (141- 150g/km) 130 130
Band G (151 to 165g/km) 165 165
Band H (166 to 175g/km) 190 265
Band I (176 to 185g/km) 210 315
Band J (186 to 200g/km) 245 445
Band K (201 to 225g/km) 260 580 also vehicles with >225g/km registered before 23 March 2006.
Band L (226 to 255g/km) 445 790
Band M (Over 255g/km) 460 1000

Heavy good vehicles

Taxation for use of Heavy good vehicles (Large goods vehicles)
Large Goods Vehicle
A large goods vehicle , is the European Union term for any truck with a gross combination mass of over...

 on UK roads are based on the size, weight per axle. For full details refer to the source reference:
HGV
Large Goods Vehicle
A large goods vehicle , is the European Union term for any truck with a gross combination mass of over...

 tax band
Standard Reduced pollution Example vehicle in this category
A £165 £160 HGV weighing less than 7.5 tonnes
B £200 £160 HGV weighing less than 15 tonnes
C £450 £210 Three and four axle vehicles weighing less than 21 tonnes
D £650 £280 Four axle vehicles weighting less than 27 tonnes
E £1,200 £700 Semi-trailer with two or more axles weighing less than 34 tonnes
F £1,500 £1,000 Semi-trailer with two or more axles weighting less than 38 tonnes
G £1,850 £1,350 Semi-trailer with three or more axles weighting less than 44 tonnes

Exempt vehicles

Various classes and uses of vehicle are provided with a tax disk without charge. These include: electrically propelled vehicles, vehicles constructed before 1973, trams, vehicles which cannot convey people, police vehicles, fire engines, ambulances and health service vehicles, mine rescue vehicles, lifeboat vehicles, certain road construction and maintenance vehicles, vehicles for disabled people, certain agricultural and land maintenance vehicles, road gritters and snow ploughs, vehicles undergoing statutory tests, vehicles imported by members of foreign armed forces, and crown vehicles.. It should be noted that although Police vehicles are in fact crown vehicles and therefore exempt from the requirement for a tax disc, they generally display them regardless to suppress complaints from members of the public who might be stopped for failure to display a valid tax disc on their own vehicle, and thus make accusations of double-standards, no matter the lack of merit.

Vehicles constructed before 1 January 1973 are eligible for a free vehicle licence
Vehicle licence
A valid vehicle licence is required by law in some countries to be displayed on any registered motor vehicle if it is to be used or kept on a public road.-Worldwide:...

 under "historic vehicle" 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. In 2006 there were 307,407 vehicles in this category:

Enforcement

In 2008 it was reported that flaws in DVLA enforcement practices have meant that more than a million late paying drivers per year have evaded detection which lost £214 million in VED revenue during 2006. 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.

Automatic number plate recognition
Automatic number plate recognition
Automatic number plate recognition is a mass surveillance method that uses optical character recognition on images to read the license plates on vehicles. They can use existing closed-circuit television or road-rule enforcement cameras, or ones specifically designed for the task...

 (ANPR) systems are being used to identify untaxed, uninsured vehicles and stolen cars.

Rates since April 2005

All rates are in pounds sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

.
2005–06 2006–07 2007–08 2008–09 2009–10 2010–11
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
Based on CO2 emission ratings for 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


∞Band K includes cars that have a CO2 figure over 225g/km but were registered before 23 March 2006.

Other terms in common use

The terms "car tax", "road tax" and "vehicle tax" are commonly used when referring to "Vehicle Excise Duty". Road tax has an entry in the Oxford English Dictionary
Oxford English Dictionary
The Oxford English Dictionary , published by the Oxford University Press, is the self-styled premier dictionary of the English language. Two fully bound print editions of the OED have been published under its current name, in 1928 and 1989. The first edition was published in twelve volumes , and...

.

Some people, in particular cyclists, cycling organisations and cycling publications object to use of the term 'road tax' since roads are paid for from general taxation, arguing that there is no such thing as a "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". The Cyclists' Touring Club
Cyclists' Touring Club
CTC and the UK's national cyclists' organisation are the trading names of the Cyclists' Touring Club.CTC is the United Kingdom's largest cycling membership organisation. It also has member groups in the Republic of Ireland...

 argue 'most adult cyclists do pay for the roads, even though they impose minimal wear and tear on them'. 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".

The direct use of taxes collected from motorists to fund the road network was opposed by Winston Churchill
Winston Churchill
Sir Winston Leonard Spencer-Churchill, was a predominantly Conservative British politician and statesman known for his leadership of the United Kingdom during the Second World War. He is widely regarded as one of the greatest wartime leaders of the century and served as Prime Minister twice...

, who 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".

A single issue campaign, 'I pay road tax' started by a cycling journalist in 2009 to challenge the use of the term 'road tax'. The campaign has received support from Edmund King, President of The AA
The Automobile Association
The Automobile Association , a British motoring association founded in 1905 was demutualised in 1999 to become a private limited company which currently provides car insurance, driving lessons, breakdown cover, loans and motoring advice, and other services...

.

In a BBC report on Look East
Look East
BBC Look East is the BBC's regional television news programme for the BBC East region, covering Norfolk, Suffolk, Essex, Cambridgeshire, Hertfordshire, Northamptonshire, Bedfordshire, north Buckinghamshire and southern Lincolnshire....

 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 . The term "road tax" is often used when referring to "vehicle excise duty" in the UK media. .

When challenged by iPayRoadTax, Which?
Which?
Which? is a product-testing and consumer campaigning charity with a magazine, website and various other services run by Which? Ltd ....

, 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.

One organisation that appears to be content with the current use of 'road tax' as the vernacular for VED is the Advertising Standards Authority
Advertising Standards Authority
Advertising Standards Authority may refer to:*Advertising Standards Bureau *Advertising Standards Authority *Advertising Standards Authority *Advertising Standards Authority...

. Complaints that advertisments using the term are incorrect are rejected with what appears to be a templated letter stating "although we acknowledge that the correct term is 'Vehicle Excise Duty', more commonly used phrases such as 'Road Tax' are often used by advertisers to convey a message in a way that will be understood by the widest audience."

History

Following the 1888 budget
United Kingdom budget
The United Kingdom budget deals with HM Treasury budgeting the revenues gathered by Her Majesty's Revenue and Customs and expenditures of public sector departments, in compliance with government policy.Adjustment is achieved with the GDP deflator....

, 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 (£ as of ),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
Hundredweight
The hundredweight or centum weight is a unit of mass defined in terms of the pound . The definition used in Britain differs from that used in North America. The two are distinguished by the terms long hundredweight and short hundredweight:* The long hundredweight is defined as 112 lb, which...

, at the rate of 5s.
£sd
£sd was the popular name for the pre-decimal currencies used in the Kingdom of England, later the United Kingdom, and ultimately in much of the British Empire...

 (£0.25) per wheel.

In the budget of 1909, the then Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...

, David Lloyd George
David Lloyd George
David Lloyd George, 1st Earl Lloyd-George of Dwyfor OM, PC was a British Liberal politician and statesman...

 announced that the roads system would be self financing, and so from 1910 the proceeds of road vehicle excise duties were dedicated to fund the building and maintenance of the road system.

The Roads Act 1920
Roads Act 1920
The Roads Act 1920 was Act of the Parliament of the United Kingdom which established the Road Fund, introduced tax discs-Clauses:The Act:*Required councils to register all new vehicles and to allocate a separate number to each vehicle...

 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
Hypothecation
Hypothecation is the practice where a borrower pledges collateral to secure a debt. The borrower retains ownership of the collateral, but it is "hypothetically" controlled by the creditor in that he has the right to seize possession if the borrower defaults...

 and paid into a newly established Road Fund
Road Fund
The Road Fund was a British Government fund designated to pay for the building and maintenance of the United Kingdom road network. Its income came originally from vehicle excise duty, until that ceased to be hypothecated for roads use in 1936, and then from government grants...

. Excise duties specifically for mechanically propelled vehicles were first imposed in 1921, along with the requirement to display a vehicle licence (tax disc)
Vehicle licence
A valid vehicle licence is required by law in some countries to be displayed on any registered motor vehicle if it is to be used or kept on a public road.-Worldwide:...

 on the vehicle.

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. Hypothecation came to an end in 1937 under the 1936 Finance Act, and the proceeds of the vehicle road taxes were paid directly into the Exchequer. The Road Fund itself, then funded by government grants, wasn't abolished until 1955.

Since 1998, keepers of registered vehicles which had been licensed since 1998, but which were not currently using the public roads, have been required to submit an annual Statutory Off-Road Notification (SORN). 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, a reduced car road tax band was introduced for cars with an engine capacity up to 1100cc. 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). 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 proposed change was that HGVs from the UK and the continent would pay exactly the same to use British roads (removing the ability of foreign vehicles to pay no UK tax). However, it was also expected that the tax would 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
Exchequer
The Exchequer is a government department of the United Kingdom responsible for the management and collection of taxation and other government revenues. The historical Exchequer developed judicial roles...

 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, a graduated vehicle excise duty system, with tax bands based on CO2 ratings, was introduced as an incentive to purchase vehicles with lower emission ratings.

In June 2005 the government announced plans to adopt a road user charging scheme for all road vehicles, which would work by tracing the movement of vehicles using a telematics
Telematics
Telematics typically is any integrated use of telecommunications and informatics, also known as ICT...

 system. The idea raised immediate objections on civil
Civil rights
Civil and political rights are a class of rights that protect individuals' freedom from unwarranted infringement by governments and private organizations, and ensure one's ability to participate in the civil and political life of the state without discrimination or repression.Civil rights include...

 and human rights
Human rights
Human rights are "commonly understood as inalienable fundamental rights to which a person is inherently entitled simply because she or he is a human being." Human rights are thus conceived as universal and egalitarian . These rights may exist as natural rights or as legal rights, in both national...

 grounds that it would amount to mass surveillance
Mass surveillance
Mass surveillance is the pervasive surveillance of an entire population, or a substantial fraction thereof.Modern governments today commonly perform mass surveillance of their citizens, explaining that they believe that it is necessary to protect them from dangerous groups such as terrorists,...

. 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 rating based bandings with the highest set at £455 per year and the lowest at £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
Cycling
Cycling, also called bicycling or biking, is the use of bicycles for transport, recreation, or for sport. Persons engaged in cycling are cyclists or bicyclists...

, but there was a strong consensus against this.

From 2010 a new first year rate is to be introduced - dubbed a showroom tax. This new tax was announced in the 2008 budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...

, 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.

See also

  • Vehicle registration plates of the United Kingdom
  • London congestion charge
    London congestion charge
    The London congestion charge is a fee charged for some categories of motor vehicle to travel at certain times within the Congestion Charge Zone , a traffic area in London. The charge aims to reduce congestion, and raise investment funds for London's transport system...

  • Vignette (road tax)
    Vignette (road tax)
    A road tax vignette is a form of tax on vehicles, used in several non-English speaking European countries. The term is of French origin, and is now used throughout Central Europe....

  • Velology
    Velology
    Velology is the study and collection of vehicle tax discs, a circular certificate placed on the windscreens of road vehicles to prove that vehicle tax has been paid. The word was created by combining the acronym VEL and -ology...

     – the study and collection of tax discs

External links

  • UK vehicle tax information on Directgov
    Directgov
    Directgov is the UK government's digital service for people in the United Kingdom, providing a single point of access to public sector information and services.The content is developed by government departments, working with a central Directgov team...

  • Apply for a tax disc online
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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