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Taxing your first car

O2 Drive

Not that taxing: vehicle tax explained

First car? Congratulations – it’s a great moment. Have you taxed your new motor yet? You need to organise car tax as soon as you buy your new car, as recent regulation changes mean that the seller can no longer transfer it to you. So, if you want to get your new wheels on the road, you need to pause and do the paperwork first. Here’s what you need to know.

What is vehicle tax?

Back in 1909, an excise duty was introduced to vehicles to pay for road-building. It’s no longer ring-fenced for roads, but goes into the general Exchequer's pot. As almost every vehicle on Britain’s roads has to be taxed by law – unless your first vehicle is an off-road tractor or a vintage car – you’ll need to pay into this pot.

How much will it cost me?

This depends on when your car was first registered. If it was after 1 April 2017 and has a petrol or diesel engine, you'll pay a flat £140 per year, or £130 if it’s a hybrid. You have to pay an extra £310 a year if your car is worth more than £40,000. 

Cars registered between April 2001 and 2017 are taxed based on engine size, CO2 emissions and fuel type. Bands range from A (low, and therefore cheaper) to M (high and costly). You can find out your car’s band from the DVLA by entering the registration number.

Does everyone pay car tax?

Yes. Only zero-emission cars are totally exempt – and they’ll still attract tax if they cost over £40,000. If you're disabled or use your vehicle to transport people with disabilities, you can claim exemption. However, you first need to go through the vehicle tax process. 

If you plan to take your car off the road for more than a few weeks, it’s worth registering it for a SORN, a statutory off-road notification. Your tax payments are stopped until it’s back on the road.

What do I need to have?

When you first buy a car, the seller hands over the vehicle log book (the V5C). In this, you’ll find the 'New Keeper’s Details' (V5C/2) slip. You’ll need this to tax your car. In future, you’ll be sent a V11 reminder letter from the DVLA. 

The DVSA keeps an electronic copy of the car’s MOT certificate. However, if you’re taxing your vehicle at the post office, you’ll need to produce a paper copy.

How do I tax my vehicle?

Once upon a time, drivers had to join the post office queue. Happily, now we can choose to tax our vehicles online. It’s a quick and simple process, provided you have either the V5C/2 or the V11 (these have reference numbers that you need to enter). 

You can set up a Direct Debit to spread out your payments, which also means you’ll never forget to pay it.

And there you go: vehicle, taxed. It’s easier than most people think and needn’t be too expensive.

There are other ways young drivers can keep motoring costs down. O2 Drive Box on Board lets you keep track of your driver score. When the device is fitted to your car, it sends data that could give you an improved renewal price in return for safer driving.