Car Tax Calculator: Your Questions Answered
Q: What is car tax and why is it so important? A: Car tax is something that all vehicle owners need to pay in order to allow them to park and drive their cars on roads in the United Kingdom.
Q: Why do I have to pay car tax? A: Drivers are required by law to purchase car tax every year. The revenue this raises is paid directly into the central government fund, which is used for projects to improve the roads for everyone these include new and upgraded roads and essential maintenance.
Q: What happens if I get caught with an untaxed car?A: If you are caught on the road in an untaxed vehicle, you could be fined up to £1,000. The DVLA can order untaxed vehicles on the street to be clamped and will impound them in some cases. When DVLA clamps an untaxed vehicle, the owner will be charged a £100 release fee. If you can’t show that the vehicle has been taxed at the time its released, you will have to pay a surety fee of £160 but you get it back if you can show the vehicle has been taxed within 15 days.
Q: Is my car taxed? How to check online A: You can check vehicle tax easily and online by going to the DVLA website and entering the vehicle registration number.
Q: How do I tax my new car? A: If you buy a brand-new car, the dealer will usually arrange for it to be registered, and will obtain a reference number from which you can get your car taxed.
Q: Do I still need a tax disc for my car? A: No, these were phased out in 2014.
Why Check The Tax Of A Vehicle
It is against the law in the UK to drive a car without road tax, therefore it is essential that you ensure your car has valid tax. The amount you will pay for your tax will depend on the category your car falls into, with different VED bands for petrol, diesel and electric cars, which vary based on the Co2 emissions emitted.
How Do The Current Car Tax Rules Work
These rules apply to all cars that were first registered after 1 April 2017.
- The first-year rate is based on CO2 emissions, broken down into a number of bands.
- For diesel cars from 1 April 2018, owners are charged a higher first-year rate unless they meet RDE2 emission standards.
- For all cars registered from 1 April 2020, the first-year rate is likely to be higher than previous years, as official CO2 measurements have risen due to changes in official tests.
- The standard rate kicks in after the first year. From April 2021, you’ll pay £155 for petrol and diesel cars, and £145 for hybrids and alternative fuel cars.
- Zero-emission cars are exempt from car tax.
- If your car cost more than £40,000 when bought new, you have to pay an extra £335 per year for five years, on top of the standard rate.
- Zero-emission cars are now also exempt from the £40,000 rule as of 1 April 2020. This includes existing owners.
- New rules are not being backdated to older cars they will continue along the previous tax system.
Below we explain the post-2017 rules in more detail, or you can skip straight to the table of car tax rates.
Wondering if you should buy an electric car? The worst we’ve seen are impractical and unreliable, but the best have a decent range and are enjoyable to drive. Find out which electric cars we recommend by checking our round-up of thebest electric cars.
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Taxing A Car The Basics
Save time
Working out how much tax you need to pay can be confusing. The fastest way is to use the Vehicle tax rates calculator at GOV.UKYoull need details for your vehicle like its make and model.
Car tax must be paid on all vehicles registered in the UK, driven on or kept on a public road. Choosing the right car can make a big difference to your tax costs.
Plus, choosing a low-tax car could mean it holds its value better as itll have lower running costs in future, too.
A vehicle kept off-road must also be taxed or have a Statutory Off Road Notification .
You can check how much road tax will be due on new and older models of car on one of the links below.
Find out how to calculate vehicle tax rates
Find out what VED you should be paying using your V5C reference number
What If I Don’t Pay My Car Tax
If you don’t pay your car tax, initially you’ll get a letter in the post accompanied by an £80 fine .
If you continue not to pay, the fine could rise to a hefty £1,000 plus court fees should it go to court. It’s illegal to drive without car tax, and the police can issue you a Fixed Penalty Notice of £1,000 if they stop you and find you haven’t paid it.
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Is Car Tax The Same As Road Tax
Road tax per se doesn’t exist, as car tax goes towards more than just the upkeep of roads. However, understandably, a lot of people search for it when they’re looking for car/vehicle tax or, to use its official name, Vehicle Excise Duty .
The UK government website commonly refers to vehicle tax.
Now you’re up-to-date with the new car tax rules, go to our car reviews for our independent test results and expert research.
Allowable Motor Vehicle Expenses Salaried Employee Expenses
Note: Line 22900 was line 229 before tax year 2019.
You can deduct your motor vehicle expenses if you meet all of the following conditions:
The types of expenses you can deduct include:
- fuel
- eligible leasing costs
If you have received a non-taxable motor vehicle allowance and can show that the employment-related motor vehicle expenses are in excess of the allowance and voluntarily include the amount of the allowance in income, you can deduct your motor vehicle expenses if conditions 1, 2, and 4 are met.
If you use more than one motor vehicle to earn employment income, calculate each vehicle’s expenses separately.
For more information about allowable motor vehicle expenses, see Motor vehicle expenses.
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Leasing From A Tax Standpoint
You can deduct the business percentage of your lease payments. For leased vehicles, the limit on the monthly lease payment that you can deduct is $800 per month plus HST, which works out to a maximum of $9,600 in expenses that are tax-deductible annually. You should definitely consider this when choosing to either buy or lease your business vehicle.
Heres a simple example to help you understand this a little better:
If your yearly lease payment is $4,200 and your business use percentage is 80%, you may be able to deduct $3,360 on your tax return for that year. That sounds pretty awesome but there is one slight hitch. Since the CRA tax rule limits the depreciation on luxury cars, it also limits lease payments on such a car.
FYI: In Canada, vehicles that cost $30,000 before HST are technically luxury vehicles under the Canada Revenue Agency guidelines. Make sure that you take that into consideration when deciding to lease or buy your car.
Essentially, the higher the price of the car, the more preferable leasing usually becomes.
For a sample of what you might be eligible for, use the CRA Chart C, to calculate for you.
How Much Does It Cost To Get A Title On A Car
Lien Recording Fee: If you have a lien on the car , the DMV may charge you to record that lien on the title. Documentation Fee: Auto dealers typically charge their own fees to do all the vehicle-purchase paperwork. Some states place a cap on these fees. Sales Tax: Most states charge sales tax on vehicles.
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How To Pay Your Road Tax
You can use a credit or debit card to pay for your road tax, or you can set up a Direct Debit.
Direct Debit payments can be annually, twice a year or monthly, but therell be a 5% surcharge for paying bi-annually or monthly.
Youll need a tax reminder letter or your cars logbook . If you dont have the logbook yet, youll need the green new keeper slip.
Most people pay for their road tax online, but you can also take your reminder or logbook to the Post Office to do it.
Buy Or Sell A Used Vehicle In Ontario
Know the steps you need to take to buy or sell a used vehicle in Ontario.
Before you sell a used vehicle, you need to:
- buy a Used Vehicle Information Package
- make sure that the Vehicle Identification Number on your vehicle matches the number on your permit
- check to ensure the vehicle has no money owing on it
When you sell your vehicle, you need to give the buyer:
- the Used Vehicle Information Package
- a signed Bill of Sale with your name, the buyers name and address, the date and purchase price
- a completed and signed Application for Transfer this is found on the back of an ownership permit, under the vehicle portion
- a certificate that verifies the vehicle meets safety standards
- you will need to get this from a licensed mechanic
- look for a green and white sign with Ontario Motor Vehicle Inspection Station on it
You keep:
- your licence plates
- the plate portion of your permit
- you will need this if you want to register your plates on another vehicle
- you can also request a refund for any full months left on your plate stickers
Finding out if money is owed on a vehicle
A Used Vehicle Information Package will tell you if there is any debt/money owing on your vehicle.
If there is a lien on the vehicle, you can contact the Ministry of Government and Consumer Services, Personal Property Security Branch, for more information:
Toronto area:
Before buying a used vehicle you should:
When you buy a vehicle, ensure the seller gives you:
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How Is Tax On A Used Car Purchase Calculated
Understanding wholesale value, Red Book value, and the HST collected on a used vehicle purchase.
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Q: I bought a used car for $16,300, but Service Ontario said the wholesale value was $29,800 for calculating taxes. My only recourse was to get a professional appraisal, which valued the car at $19,000. This saved me $1,404 in taxes, but I still paid $351 more than what was rightly owed.
How does the government come up with these unrealistic values? What if I got a real bargain at a car auction?
Scott Blodgett of the Ministry of Finance replies:
The Red Book value of a vehicle, used for tax calculations, is part of the Used Vehicle Information Package required when a vehicle is sold privately. The cost of the UVIP is $20. If a Red Book value has been assigned to a vehicle, it will be provided on the UVIP. If no Red Book value has been assigned, which can occur in cases of older or newly-manufactured vehicles, youd pay the tax based on the bill of sale amount.
As the reader notes, consumers can have a vehicle professionally appraised if they disagree with the Red Book valuation used by the ministry.
Eric Lai adds: For cars purchased from a registered dealer, including an auction house, HST is collected by the seller based on the actual price paid. The dealership will also handle transferring ownership to you.
Bob Nichols of the MTO replies:
Car Tax Rates For Cars First Registered Before 1 April 2017
Any cars first registered as new after 1 March 2001, but before 1 April 2017, continue to be taxed at their previous, respective rates. These are based on official CO2 emissions.
The amount of CO2 your car produces puts it into one of 13 bands, which are assigned letters A to M. Cars in band A emit the least amount of CO2, and are currently exempt from paying any car tax throughout the life of the car.
The rates below show the current rates, assuming you choose to make a single payment for the year.
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Do I Have To Pay Tax On A Used Car From A Private Seller
In the past, there was a lot of dissension about tax applying to private sales. Over time rules came into place to govern this. When it comes to the private sales, the tax implication is different. Federal taxes have no bearing on this such as the HST. It will depend on the provincial tax regulations to what kind of tax is owing. Most of the provinces will have some regulations about this.
There is still ongoing contention about the taxes. It respects to a private sale of a vehicle. The argument is that the vehicle could go on a sale several times. Each time there is a tax levied against it.
The tax owed is determined by the province. But in most cases, its on the full sale price of the vehicle.
Some individuals want to try and avoid paying the full amount of the tax that they have to pay. They may try and get the seller to give them a receipt for a lesser amount. Indicating they have paid less. The Ministry is aware of this practice.
Cars Registered Between 2001 And 2017
Not too long ago, the tax system was a lot simpler, cars were charged according to their CO2s and you paid the same rate every year. Sure, there were parallel charging structures one for petrols and diesels, the other for ‘alternatively’ fuelled cars but that was as complicated as it got. It was less stringent than the current system so cars that produced 100g/km or less qualified for free road tax so a tiny city car would pay no more than an electric model like the Nissan Leaf. Even gas guzzlers got off comparatively lightly, paying no more than £580 a year, slightly more if you decided to break up the payment in monthly instalments.
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First Tax Payment When The Car Is Initially Taxed
The rate is based on a vehicles CO2 emissions when its first registered. This is commonly known as ‘showroom tax’. You can see how that will effect your new-car purchase in the table below, but it stands to reason that a big SUV with a large engine will guzzle more fuel and produce more CO2 emissions than a small city car with a fuel-guzzling habit measured by the thimble.
Q: When Does My Road Tax Expire
Road tax must be renewed every year, although payments can be made on either a 6-month or 12-month basis. You can check when your car tax expires using our free car tax check by entering your registration plate at the top of the page.
Some cars have free road tax, but you will still need to register your car using the DVLA website. Read our informative guide on car tax bands to find out how much your road tax will be.
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Car Tax Calculator: When Is It Due For Renewal And How Much Is It
- 8:31, 13 Aug 2021
YOU could be fined up to £2,500 if you fail to tax your car, so it’s important to know when the renewal date is.
If you drive, you have to apply for car tax and pay off the fee every year, but it can be a different amount for every motorist – we explain everything you need to know.
Cars Registered Before 2001
2001 seems like a long time ago Brit Pop was making way for hip-hop in the charts, Blair led a Labour government and baggies were the dominant force on the trouser scene, oh, and road tax was cheap with a capital C if you drove a gas guzzler. Whether you drove a 1.6-litre four-cylinder, 4.0-litre six, 5.0-litre V8 or a 6.0-litre V12, road tax would cost you no more than £270 or about £460 in 2021 money. That said, the opposite was true for thrifty small cars an engine of 1.5-litre or less meant you paid £165 a steep £280 if you take account of inflation.
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Repayments And Imputed Interest
When you lease a passenger vehicle, you may have a repayment owing to you, or you may have imputed interest. If so, you will not be able to use the chart.
Imputed interest is interest that would be owing to you if interest were paid on the money you deposited to lease a passenger vehicle. Calculate imputed interest for leasing costs on a passenger vehicle only if all of the following apply:
- one or more deposits were made for the leased passenger vehicle
- one or more deposits are refundable
- the total of the deposits is more than $1,000
