Vehicle Excise Duty#1990s

File:LT150 (LTZ 1150) from OCE3 (LJ14 SZR), Regent Street Bus Cavalcade.jpg

VED across the United Kingdom is collected and enforced by the Driver and Vehicle Licensing Agency (DVLA). Until 2014, VED in Northern Ireland was collected by the Driver and Vehicle Agency there; responsibility has since been transferred to the DVLA.{{Cite web |url=http://www.northernireland.gov.uk/news-doe-160714-dva-issues-reminder |title=DVA Issues Reminder that all Motor Tax Offices in Northern Ireland Close on 17 July 2014 |publisher=Northern Ireland Executive |archive-url=https://web.archive.org/web/20160416233807/https://www.northernireland.gov.uk/news-doe-160714-dva-issues-reminder |archive-date=16 April 2016 |url-status=dead}}{{cite news |url=https://www.belfasttelegraph.co.uk/life/motoring/taxing-vehicles-at-northern-ireland-dva-offices-will-end-on-july-17/30377918.html |title=Taxing vehicles at Northern Ireland DVA offices will end on July 17 |work=Belfast Telegraph |first=Rebecca |last=Black |date=24 June 2014 |access-date=15 February 2025}}

The registered keeper of a vehicle that is liable for VED must pay the appropriate VED amount (which may be zero) to license the vehicle for road use. 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 public highway are not required to pay VED, but are required to submit an annual Statutory Off-Road Notification (SORN).{{cite web |url=https://www.gov.uk/make-a-sorn |title=Register your vehicle as off the road (SORN) |website=GOV.UK |publisher=Government Digital Service |access-date=15 February 2025}} Failure to submit a SORN is punishable in the same manner as failure to pay duty when using the vehicle on public roads.

Until 1 October 2014 a vehicle licence (tax disc) had to be displayed on a vehicle (usually adhered inside the windscreen on the nearside, thus easily visible to officials patrolling roads on foot) as evidence of having paid the duty. Since that date, the circular paper discs have not been issued and there is no longer a requirement to display a disc as the records are now stored in a centralised database and accessible using the vehicle registration plate details.{{cite web |title=Paper tax discs abolished |url=https://www.gov.uk/government/news/direct-debit-and-abolition-of-the-tax-disc |publisher=Gov.uk |access-date=22 January 2014}}

There are three payment schedules in effect, depending on whether the car was first registered before or after 1 April 2017, or before 1 March 2001. Further changes took effect in April 2025, affecting new and existing electric vehicles.

For cars registered before 1 March 2001 the excise duty is based on engine size.{{Cite web |title=Vehicle tax rates |url=https://www.gov.uk/vehicle-tax-rate-tables |access-date=2025-01-10 |website=GOV.UK |language=en}}

File:UK car vehicle excise duty 2013.svg emission for cars in the United Kingdom as of 2013, labelled with class bands. The solid blue line denotes the first year and the dashed black line denotes subsequent years. The dotted black line (labelled *) denotes vehicles registered before 23 March 2006.]]

For vehicles registered between 1 March 2001 and 31 March 2017 charges are based on theoretical CO₂ emission rates per kilometre. The price structure was revised from 1 April 2013 to introduce an alternative charge for the first year (the standard cost was not changed, and remained the same as for 2001 onwards). 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".{{cite web |url=http://www.direct.gov.uk/en/Motoring/OwningAVehicle/HowToTaxYourVehicle/DG_10012524 |title=The cost of vehicle tax for cars, motorcycles, light goods vehicles and trade licences |work=Direct Gov |access-date=2 June 2011}}

Charges as applicable from 1 April 2025:

The biggest changes from April 2017 were that hybrid vehicles were no longer rated at £0, and that cars with a retail price of £40,000 and over would pay a supplement for years 2 to 6.{{Cite web |last=Porter |first=Adrian |date=11 January 2023 |title=Car tax explained |url=https://www.which.co.uk/reviews/new-and-used-cars/article/car-tax-explained-aqnPf4D3c26Y |access-date=2023-03-04 |website=Which? |language=en}}

For cars with a "list price" over £40,000 an additional amount – the 'expensive car supplement' – is paid at the first five annual renewals, i.e. in years 2 to 6 of the vehicle's life. At first the supplement applied to all types of car, but the 2020 Budget provided an exemption for zero-emission vehicles (both new and existing), effective from 1 April 2020;{{Cite web |last=Porter |first=Adrian |date=11 March 2020 |title=Car tax changes: most new car owners will pay more tax from April |url=https://www.which.co.uk/news/article/car-tax-changes-most-new-car-owners-will-pay-more-tax-from-april-aynuo2z5Nk8i |access-date=2023-03-04 |website=Which? |language=en}}{{Cite web |date=March 2020 |title=Budget 2020 |url=https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/871799/Budget_2020_Web_Accessible_Complete.pdf |access-date=4 March 2023 |website=GOV.UK |publisher=HM Treasury |page=94}} this exemption ended in April 2025. The supplement increases each year, and is £425 from April 2025.{{Cite web |last=Cooper |first=Eleanor |date=11 February 2025 |title=What is the luxury car tax supplement? |url=https://www.whatcar.com/advice/buying/what-is-the-expensive-car-road-tax-supplement-luxury-car-tax-explained/n27431 |access-date=2025-04-09 |website=www.whatcar.com}}

In November 2022, the UK government announced that reduced tax rates for zero-emission vehicles would cease on 1 April 2025, making rates the same as for those with internal combustion engines. The changes affect new and existing vehicles as follows:{{Cite web |date=21 November 2022 |title=Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025 |url=https://www.gov.uk/government/publications/introduction-of-vehicle-excise-duty-for-zero-emission-cars-vans-and-motorcycles-from-2025/introduction-of-vehicle-excise-duty-for-zero-emission-cars-vans-and-motorcycles-from-2025 |access-date=2023-03-04 |website=GOV.UK |publisher=HM Revenue & Customs |language=en}}{{Cite web |date=17 November 2022 |title=Autumn Statement 2022 – what does it mean for drivers? |url=https://www.rac.co.uk/drive/news/motoring-news/autumn-statement-2022-what-does-it-mean-for-drivers/ |access-date=2023-03-04 |website=RAC |language=en}}

• Zero-emission cars first registered on or after 1 April 2017 will pay the 1–50g/km rate in their first year of registration, and the standard annual rate in subsequent years.
• The £10 reduction for alternative fuel vehicles and hybrid vehicles will be removed, bringing them also onto the standard rate.
• The exemption from the expensive car supplement was already due to end in 2025.

Registered on or after 1 March 2001 and not over 3,500 kg revenue weight (also known as maximum or gross vehicle weight).

Registered between 1 March 2003 and 31 December 2006, Euro 4 compliant and not over 3,500 kg revenue weight.

Registered between 1 January 2009 and 31 December 2010, Euro 5 compliant and not over 3,500 kg revenue weight.

Trade licences are available for between 6 and 12 months, depending on the month in which the application is made.

VED payable for heavy goods vehicles (those over 3,500 kg revenue weight) varies according to their weight and axle configuration. The 12-month rates applicable from 1 August 2023 range from £80 to £850.{{Cite web |title=V149/1 – Rates of vehicle tax for heavy goods vehicles etc |url=https://assets.publishing.service.gov.uk/media/64ca1f035c2e6f0013e8d967/v149x1-rates-of-vehicle-tax.pdf |access-date=16 February 2025 |website=DVLA}}

An additional HGV levy for vehicles with a revenue weight of 12,000 kg or more was introduced with effect from 1 April 2014.{{Cite web |date=28 February 2013 |title=HGV Road User Levy Act 2013 |url=https://www.legislation.gov.uk/ukpga/2013/7/data.xht?view=snippet&wrap=true |access-date=16 February 2024 |website=legislation.gov.uk}} The levy is paid at the same time as VED, the amount varying according to weight, axle configuration and emissions rating; there are higher levies for vehicles pulling a trailer of over 4,000 kg. The 12-month levies applicable from 1 August 2023 range from £150 to £749.

Vehicles over 12,000 kg that are not registered in the UK must also pay the HGV levy before entering the UK, although zero-emission vehicles are exempt. Payment can be made on a daily, weekly, monthly or annual basis. The rate ranges from £3 per day (or £150 per year) to £10 per day (or £749 per year).{{Cite web |date=2024-09-12 |title=How to use the HGV levy service |url=https://www.gov.uk/guidance/how-to-use-the-hgv-levy-service |access-date=2025-02-16 |website=GOV.UK |language=en}}

The HGV levy was suspended from 1 August 2020 to 31 July 2023 to support the haulage sector and aid pandemic recovery efforts.{{Cite web |last=Field |first=Russell |date=24 June 2022 |title=HGV levy: RHA says government should consider delay to reintroduction |url=https://transportuk.co.uk/2022/06/24/hgv-levy-rha-says-government-should-consider-delay-to-reintroduction/ |access-date=16 February 2025 |website=Transport UK}}

Various classes and uses of vehicle are exempt, including vehicles older than 40 years (see below), 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.{{cite web |title=Vehicle Excise and Registration Act 1994: Schedule 2 |url=http://www.legislation.gov.uk/ukpga/1994/22/schedule/2 |publisher=The Crown}} Electrically propelled vehicles were exempt until 1995 (at a time when the most common electric vehicles were milk floats); today, they are not exempt, though they were generally zero-rated until April 2025.

Each year on 1 April, vehicles constructed more than forty years before the start of that year become eligible for a free vehicle licence 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, in 1997 the cutoff date was frozen at 1 January 1973. The change to "pre-1973" was unpopular in the classic motoring community, and a number of classic car clubs campaigned for a change back to the previous system.{{cite web|url=http://www.govyou.co.uk/classic-car-ved-exemption/|title=Classic Car VED Exemption|publisher=Your Government|access-date=12 February 2011|archive-url=https://web.archive.org/web/20110913121249/http://www.govyou.co.uk/classic-car-ved-exemption/|archive-date=13 September 2011|url-status=dead}} In 2006 there were 307,407 vehicles in this category.{{cite web|url=https://www.theyworkforyou.com/wrans/?id=23|title=Motor Vehicles: Excise Duties|work=TheyWorkForYou|access-date=30 March 2010}}{{Dead link|date=July 2018 |bot=InternetArchiveBot |fix-attempted=yes }}{{needs update|date=July 2025}}

On 1 April 2014, vehicles manufactured before 1 January 1974 became exempt from the VED (Finance Act 2014, as set out in the 2013 Budget, 20 March 2013). In the 2014 Budget, the government introduced the forty-year rolling exemption, with vehicles built before 1 January 1975 becoming exempt on 1 April 2015 and so on.{{cite web |url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293910/TIIN_2507_8011_40_year_rolling_exemption_for_classic_vehicles_.pdf |publisher=HM Revenue and Customs |title=Vehicle Excise Duty: 40 year rolling exemption for classic vehicles |access-date=15 June 2014}}

{{See also|Traffic enforcement camera}}

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.{{cite news|url=https://www.thetimes.com/travel/advice/a-million-drivers-are-exploiting-loophole-in-road-tax-payments-350dk6lbvz6|title=A million drivers are exploiting loophole in road tax payments |work=The Times | location=London}} It was estimated that 6.7% of motorcycles were not taxed in 2007. Since then better systems reduced the loss to an estimated £33.9 million in 2009/2010.{{cite web |url=http://www.dft.gov.uk/pgr/statistics/datatablespublications/vehicles/excisedutyevasion/ved2009 |title=Vehicle excise duty evasion: 2009 |publisher=Department for Transport |url-status=dead |archive-url=https://web.archive.org/web/20101102024502/http://www.dft.gov.uk/pgr/statistics/datatablespublications/vehicles/excisedutyevasion/ved2009 |archive-date=2 November 2010}}

Automatic number plate recognition (ANPR) systems are being used to identify untaxed, uninsured vehicles and stolen cars.{{cite web |url=https://www.theregister.co.uk/2005/11/15/vehicle_movement_database/ |title=Gatso 2: rollout of UK's '24x7 vehicle movement database' begins|website=The Register |date=15 September 2005 |access-date=14 October 2008 |author=John Lettice}}{{cite web |website=The Register |url=https://www.theregister.co.uk/2008/09/15/anpr_five_years/ |title=Vehicle spy-cam data to be held for five years |author=Chris Williams |date=15 September 2008 |access-date=15 October 2008}}

{{More citations needed section|date=November 2010}}

File:The Right Hon. David Lloyd George.jpg introduced a hypothecated motor vehicle tax in 1920 to pay for the road network.]]

File:Churchill and Chamberlain.jpg and ended by Chamberlain's government in 1937.{{cite book|last1=Savage|first1=Christopher|last2=Barker|first2=T. C.|title=Economic History of Transport in Britain|date=2012|publisher=Routledge|isbn=9781135654559|url=https://books.google.com/books?id=OOcw9LzrJa8C&q=road%20fund%20%20chamberlain%201937&pg=PA188|access-date=27 March 2018|language=en}}]]

Following the 1888 budget, 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 (equivalent to £{{formatnum:{{Inflation|UK|5|1888|{{Inflation-year|UK}}|r=2}}}} as of {{Inflation-year|UK}}),{{Inflation-fn|UK|df=y}} 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, at the rate of 5s (£0.25) per wheel.{{cite news |title=The speech of the Chancellor of the Exchequer |date=27 March 1888 |newspaper=The Times}}{{cite news |title=The Excise Duties (Local) |date=27 March 1888 |newspaper=The Times}}

In the budget of 1909, the then Chancellor of the Exchequer, David Lloyd George announced that the roads system would be self-financing,{{Cite book|title=Vehicle excise duty (VED)|first=Louise|last=Butcher|publisher=House of Commons Library|date=25 November 2008}} and so from 1910 the proceeds of road vehicle excise duties were dedicated to fund the building and maintenance of the road system. Even during this period the majority of the cost of road building and improvement came from general and local taxation owing to the tax being too low for the upkeep of the roads.{{Cite book|last1= Plowden|first1= William|title= The Motor Car And Politics 1896–1970|year= 1971|publisher= The Bodley Head|location= London|isbn= 0-370-00393-4}}

The Roads Act 1920 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 – that is, the revenue would be exclusively dedicated to a particular expenditure, namely the newly established Road Fund.{{Cite book|title=Mixed Blessing: The Motor in Britain |author=C. D. Buchanan |publisher=Leonard Hill |year=1958}} Excise duties specifically for mechanically propelled vehicles were first imposed in 1921, along with the requirement to display a vehicle licence (tax disc) on the vehicle.{{Cite web|url=https://publications.parliament.uk/pa/cm200708/cmselect/cmenvaud/907/907.pdf|title=Vehicle Excise Duty as an environmental tax|author=House of Commons Environmental Audit Committee|publisher=The Stationery Office Limited|date=22 July 2008}}

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 he was Chancellor of the Exchequer.{{Citation needed|date=May 2010}} In 1926, by which time the direct use of taxes collected from motorists to fund the road network was already opposed by many in government, the Chancellor, Winston Churchill is reported to have said in a memo: "Entertainments may be taxed; public houses may be taxed ... and the yield devoted to the general revenue. But motorists are to be privileged for all time to have the tax on motors devoted to roads? This is an outrage upon ... common sense."{{cite news|last1=Harrabin|first1=Roger|title=Is there any such thing as 'road tax'?|url=https://www.bbc.co.uk/news/magazine-23694438|access-date=27 March 2018|work=BBC News|date=15 August 2013|archive-url=https://web.archive.org/web/20180327201818/http://www.bbc.co.uk/news/magazine-23694438|archive-date=27 March 2018|url-status=live}} 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, was not 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).[http://www.direct.gov.uk/en/Motoring/OwningAVehicle/UntaxedVehicle/DG_4022058 How to make a SORN (Statutory Off Road Notification) : Directgov – Motoring] Failure to submit a SORN is punishable in the same manner as failure to pay duty when using the vehicle on public roads. It was announced in the 2013 Budget that SORN declarations would become perpetual, thus removing the need for annual renewal after the initial declaration has been made. In June 1999, a reduced VED band was introduced for cars with an engine capacity up to 1100cc.[http://archive.treasury.gov.uk/budget/1999/nr/hmt5.txt : Budget Report 1999] {{webarchive|url=https://web.archive.org/web/20081120002659/http://archive.treasury.gov.uk/budget/1999/nr/hmt5.txt |date=20 November 2008 }} The cost of 12 months tax for cars up to 1100cc was £100, and for those above 1100cc was £155.

During the 1990s, political arguments were put forward for the abolition of VED. Among the proposals was a suggestion that VED could be replaced by increased fuel duty as an incentive for consumers to purchase vehicles with lower emission ratings. The proposal was politically unappealing, as it would increase costs for businesses and for people living in rural areas. Rather than abolish VED, the Labour government under Tony Blair introduced a new system for calculating of VED that was linked explicitly with a vehicle's carbon emissions ratings, as a means for vehicle emissions control. Since March 2001, VED for cars has been levied in a system of tax bands based on CO₂ ratings.{{Cite web |last=Butcher |first=Louise |date=16 November 2010 |title=Parliementary briefing: Vehicle Excise Duty |url=http://www.parliament.uk/Templates/BriefingPapers/Pages/BPPdfDownload.aspx?bp-id=SN01482 |url-status=dead |archive-url=https://web.archive.org/web/20111125013025/http://www.parliament.uk/Templates/BriefingPapers/Pages/BPPdfDownload.aspx?bp-id=SN01482 |archive-date=25 November 2011 |website=House of Commons Library |pages=5–8 |via=Internet Archive}}

In tax year 2002–2003, it is estimated that evasion of the tax equated to a loss to the Exchequer 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 expiry. A maximum fine of £1,000 applies for failure to pay the tax, though in practice fines are normally much lower.{{Citation needed|date=March 2025}}

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 bands were also backdated to cover vehicles registered on or after 1 March 2001, meaning that vehicles with the highest emissions ratings registered after this date pay the most. Vehicles registered before 1 March 2001 continued to be charged according to engine size, above or below 1549cc.

In 2010, different first-year rates were introduced as a signal to purchasers.{{cite news |title=Budget 2008: Motorists suffer tax hits in 'green' budget |author=Robert Winnett |date=13 March 2008 |work=The Daily Telegraph |url=https://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/12/bcnbudget1912.xml |archive-url=https://web.archive.org/web/20080314054517/http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/12/bcnbudget1912.xml |url-status=dead |archive-date=14 March 2008 |access-date=14 May 2008 |location=London}}{{cite web |title=Budget 2008 – motoring taxes |publisher=DirectGov |url=http://www.direct.gov.uk/en/Nl1/Newsroom/Budget2008/DG_073093 |access-date=14 May 2008 |url-status=dead |archive-url=https://web.archive.org/web/20080518104852/http://www.direct.gov.uk/en/Nl1/Newsroom/Budget2008/DG_073093 |archive-date=18 May 2008 }}

VED can be automatically be collected from a bank account by Direct Debit.{{Cite web|url=https://www.gov.uk/vehicle-tax-direct-debit/renewing|title = Vehicle tax Direct Debit payments}} VED can still be paid if a reminder is not received.{{Cite web |date= |title=Tax your vehicle without a vehicle tax reminder |url=https://www.gov.uk/tax-vehicle-without-v11-reminder |access-date=28 Mar 2025 |website=Gov.uk}}

• Car costs
• London congestion charge
• Motoring taxation in the United Kingdom
• Road Fund
• Vehicle registration plates of the United Kingdom
• Velology – the study and collection of tax discs
• Vignette (road tax)

{{reflist|colwidth=30em}}

• [http://www.direct.gov.uk/vehicletax UK vehicle tax information] on Directgov
• [https://web.archive.org/web/20080823023332/http://www.taxdisc.direct.gov.uk/ Apply online]

{{Use dmy dates|date=May 2020}}

{{Authority control}}

{{Use British English|date=November 2024}}

{{DEFAULTSORT:Vehicle Excise Duty}}

Category:Motoring taxation in the United Kingdom

Category:Vehicle taxes

Category:Transport policy in the United Kingdom

Category:1888 introductions

Category:Car costs