New UK car tax rules: all you need to know about VED road tax

Tax disc
17 Jul, 2015 12:00pm Steve Walker

The way you tax your car has changed - here's all you need to know about the changes in Vehicle Excise Duty (VED, known as road tax)

The Government announced the end of the paper tax disc in October 2014 after 93 years meaning that you no longer need to display the disc in you windscreen. Instead number plate recognition will be used to check that you have paid you Vehicle Excise Duty (VED).

We've put together a comprehensive guide to the changes in VED, what the changes mean for you, how you pay and also what happens when you come to sell your car.

• Guide to road tax bands

Current road tax bands won’t change so the price you pay stays the same but that won’t be the case from 2017 following the announcement by George Osborne in the July 2015 Budget.

The tax disc scrappage also brought in changes as to what happens when you come to sell your car and how you can pay, so we've explained it all below.

VED changes explained

Since October 1st 2014 the colourful paper circles have no longer been issued and the requirement for motorists to display them in their cars has ended. In the tax disc's place comes a new system for paying your road tax, or Vehicle Excise Duty to use its proper name.

This overhaul of the road tax arrangements ends the tax disc's 93-year reign and has made the whole system cheaper to run. There is a catch, however, as you'll find out below.

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The new road tax set-up also makes it tougher for those seeking to avoid paying road tax. Rather than the visual check that the tax disc made possible, the authorities now rely on numberplate recognition cameras to determine that a vehicle has been taxed. 

VED tax bands will change for new cars registered from April 2017, too, with first year rates based on emissions and a flat £140 a year thereafter. Cars with a list price over £40,000 will carry a £310 extra charge for five years. Zero emissions car will be exempt.

What do the road tax changes mean for you?

If you’ve still got a tax disc you don’t need it. You can get rid of it even if it still has outstanding tax on it. Your car will be registered with the DVLA so you won’t be pulled over for not displaying one.

This doesn’t mean you don’t have to pay car tax though. The DVLA will send you a reminder when your road tax is up for renewal in the time-honoured fashion, you can then pay your road tax online, over the phone or at the Post Office.

Tax disc

The road tax price bands remain the same, as do the existing options of paying for 12 or 6 months tax upfront but there’s also the option of paying your car tax monthly. This new monthly option arrives in tandem with the facility to pay your road tax by Direct Debit.

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Drivers paying in monthly instalments from their bank accounts will be subject to a 5% surcharge on top of the road tax price itself. That’s less than the 10% that’s added when you pay for six months tax, an option currently used by 23% of motorists. Only the one-off annual payment comes with no extra charges.

The key advantage of paying your car tax by Direct Debit is that the DVLA will continue taking the payments until you tell them to stop. It means that you’ll no longer need to remember to renew your car tax, it'll just happen and you can get on with more exciting stuff - like remembering your MOT.

What happens to your road tax when you sell your car?

Under the new car tax system, any remaining road tax will not transfer to the new owner with the vehicle. Instead, the seller can get a road tax refund on any tax remaining on the vehicle, while the buyer has to pay to re-tax the car. 

The tax refund on a sold car will be sent automatically when the DVLA receives notification that the car has been sold, scrapped, exported or taken off the road with a Statutory Off Road Notification (SORN).

Sellers are expected to inform the DVLA of any change of ownership straight away or face a £1,000 fine. If they don’t, they could also still be liable for speeding or parking fines incurred by the new owner.

Information on whether or not a car is taxed is available online via the Government website. All you need is the make and model of the car plus the registration number.

Are more cars now untaxed on UK roads?

Auto Express figures reveal enforcement cases for untaxed cars have risen by almost 50 per cent in the six months since the tax disc was scrapped.

Exclusive data obtained from the Driver and Vehicle Licensing Agency (DVLA) shows 117,490 enforcement cases were created between October 2014 and March 2015 compared to just 82,999 and 86,939, in the previous two six-month periods when the tax disc was still in operation.


The number of out-of-court settlements issued for drivers without tax has nearly doubled, too, since the abolition – to 97,348 from 53,799. 

The DVLA claims that it sends new owners a warning letter before clamping or towing their car away and also says that it has written to new owners to make them aware of the changes.

Is there a catch to the new Vehicle Excise Duty regime?

So far, so good for the new road tax system but as often seems to be the case, there is a catch.

The problem that's getting motorists riled centres around the refund you get on outstanding road tax when you sell your car. When ownership of a vehicle is transferred the previous owner gets a refund on any outstanding road tax but that refund is calculated from the beginning of the next month. The new owner, on the other hand, has to tax the car anew and their bill is calculated from the beginning of the current month.

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What this means is that the Government effectively collects two lots of tax on the car for the month where ownership is transferred, one from the new owner who pays for that month and one from the previous owner who doesn’t get the tax for that month included in their refund. It's sneaky stuff and should give a useful boost to the exchequer, but at the expense of motorists.  

What should i do with my useless tax disc?

The short answer is chuck it out but some people have started collections one of our readers. For most 12-year-olds, the death of the tax disc won’t mean much, but that’s not true for Jude Currie. Jude, from Cobham, Surrey, has a collection of 12,000 tax discs with his oldest dating back to 1926.

“I don’t think it’s a good thing. It’s like taking away stamps,” he said. Car enthusiast and Auto Express reader Jude started collecting tax discs in 2009 after spotting one on the windscreen of an abandoned Fiat advertised online.

Since then he hasn’t looked back, often picking up discs from scrapyards. The 1926 disc – a present from his parents – is now worth around £100.

“I like all classic cars and the Metro is probably my favourite, I can’t wait to learn to drive” said Jude. But why the tax disc? He added: “I saw the tax disc on the abandoned Fiat and thought it would be an interesting thing to collect. I never had a target but the collection has just gone up and up – I never expected it to be so big.” 

But is it now the end of the road for his collection? “No, I’m going to hold onto it and add to it,”he explained. “More people will be giving the old ones away now, too.” 

With thanks to

Goodbye to the tax disc: video

The DVLA produced the above video advertisement to raise awareness of the demise of the tax disc but a  survey by suggested that 50% of motorists were still unaware that the tax disc change was imminent.

Car tax changes: key questions answered

Where can I buy my car tax?

Online, by post, or at a Post Office. Monthly payment is now an option but it’ll cost more in total. You’ll still get a reminder.

Can I transfer my car tax?

No, tax will be automatically refunded when you sell or scrap the vehicle and notify the DVLA via the V5C.

Can I see if a car is taxed?

You can check the status of any car tax via the Government website. Visit and enter the reg number.

How is car tax be monitored?

Police cars are fitted with number plate recognition cameras already and the cameras are used across the road network.

Click here to read our guide on the current UK car tax bands...