Car tax bands: What you need to know

Understanding car tax bands

Owning your own car comes with a lot of costs that might not be evident to first-time buyers. Among other things, there’s car tax which you will be required to pay on an annual basis. Car tax varies, and the amount of car tax you pay depends on a number of key factors including the date of registration and the size of the car engine, fuel type, or CO2 emissions. Car tax is mandatory and in order to tax your vehicle, you also need to have insurance in place and a valid MOT.

It sounds fairly complicated, so how do you work out what car tax band your vehicle sits in? Let’s look at how cars are classified for tax purposes.

Cars registered before 1 March 2001

If you have have an older vehicle which was registered before March 2001, the categorisation of tax is very simply split into two vehicle taxbands. You will pay the relevant tax charge whether your car has an engine size over 1,549cc or under 1,549cc.

Cars registered between March 2001 and April 2017

If you’ve bought a car registered since 2001, your vehicle tax band will be determined on a sliding scale based on the CO2 emissions it emits. Very simply, the lower the CO2 emissions, the lower your tax charge. If your car emits less than 100g/km, you won’t incur any car tax at all. Keen to promote efficient and more environmentally friendly cars, the government now also waivers car tax for the first year for any new car which emits lower than 130g/km emissions.

Cars registered after April 2017

The laws changed again last year for tax bands on cars registered after April 2017. The way in which car tax bands are calculated is still based on CO2 emissions, but there is a reduction on the first year tax waiver. Now, only cars which emit no CO2 emissions will be exempt from paying car tax.

Paying your tax bill

For many years, car owners had to display a tax disc in their cars which was physically checked to determine whether a car was suitably taxed. In the digital age, that has been replaced by electronic system which authorities can reference to check tax status.

When do I have to pay car tax?

As a car owner, you will be automatically notified when your car tax is up for renewal. There are options to tax your car for six or 12 months. The easiest way to pay your tax is to do it online. You will need to use either the reference number from your reminder letter (V11) or from your vehicle log book (V5C). You can pay by credit/debit card or Direct Debit if you prefer. It’s worth noting that you will end up paying more if you pay by Direct Debit. Alternatively, you can head to your local post office and pay in person.

Always make sure that you buy your car from a dealer you can trust. If you have any questions about buying a car, why not visit us at one of our showrooms in Harlow and Maidstone.