Vehicle excise duty

Vehicle Excise Duty (VED) in the United Kingdom, often known as car tax, is an annual tax on the ownership of road vehicles, collected and enforced by the Driver and Vehicle Licensing Agency.

Cars registered before March 1 2001 are charged according to engine capacity. In the 2004 - 2005 tax year this was £165 for those with a capacity over 1549cc, otherwise £110.

For cars registered on or after March 1 2001 the tax is known as graduated vehicle excise duty (GVED) and is based on the level of carbon dioxide (CO2) emission. For the tax year 2004 - 2005 this varied between £55 and £165. GVED was announced in the March 1998 Budget to offer a small incentive to purchase vehicles with low emission levels.

Rates for other vehicles vary between £15.00 for motorcycles with an engine capacity under 150cc, to a maximum of £1,850 for the largest heavy goods vehicles (HGVs).

Owners of vehicles paying the tax are issued with a tax disc to be displayed on the vehicle. In tax year 2002 - 2003, it is estimated that evasion of the tax equated to a loss to the exchequer of 206 million pounds. 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 the expiry of the previous tax disc. A maximum fine of £1,000 applies for failure to pay the tax, though in practice fines are normally much lower.

Future change

It has been announced that VED for HGVs will be replaced, probably in 2005 or 2006 by a new tax based on distance travelled, the Lorry Road-User Charge (LRUC). At the same time, the rate of fuel duty will be cut for such vehicles.

The primary aim of the change are that HGVs from the UK and the continent pay exactly the same to use British roads (removing the ability of foreign vehicles to pay no UK tax). However, it is also expected that the tax will be used to influence routes taken (charging lower rates to use motorways, reduce congestion (by varying the charge with time of day), and encourage low emission vehicles.

The government plan to adopt a similar road user charging scheme for other road vehicles. Because the scheme would involve tracing the location of all vehicles using a telematics system, the idea has already raised objections on civil rights and human rights grounds.

See also

External links

  • Currrent VED rates (http://www.dvla.gov.uk/vehicles/taxation.htm)
  • VED evasion (http://www.dft.gov.uk/stellent/groups/dft_control/documents/contentservertemplate/dft_index.hcst?n=8137&l=4)


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