What Is 'Road Tax'
One of the legal obligations of all drivers and riders is to have up to date vehicle tax, which can be checked online on the gov.uk website (https://www.gov.uk/check-vehic...). Road tax is the common name used for Road Fund License and Vehicle Excise Duty (VED), all of which are one of the same thing. Since 1 April 2017, tax is payable from when the vehicle is first registered and covers for the tax for 12 months. After the first 12 months, tax is payable either every 6 or 12 months at a different rate. But how do is the first tax payment calculated?
The first tax payment is calculated based on the CO2 of the vehicle at the time it is first registered. A higher rate is payable for diesel cars that do not meet the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions. Whether you are buying or leasing a new diesel vehicle, you can ask whether the manufacturer whether it meets the RDE2 standard.
A full list of applicable rates for each vehicle type can be found on Gov website.
What Does My Road Tax Pay For?
All Road Tax goes into Central Government and is used for the maintenance and upkeep of essential infrastructure on our roads, including repairs and building new ones. That being said, as the funds go into Central Government, it is up to the Exchequer to decide how it is spent and how much goes where. As such, it is unlikely that every penny of our Road Tax is actually spent on the roads. Indeed, it can be hard to accept that money is spent on our roads when many are littered with potholes and there are lengthy tailbacks.
The Office for Budget Responsibilities reported in 2022-23 that an estimated £7.2 billion was generated in revenue from Road Tax. To put this into some perspective, when the M25 and its 117 miles were completed in 1986, it cost £900m in 1986 money, which is approximately £2.5 billion today.
Also in 2022-23, according to documents published by the Government, local authority road maintenance cost £4.5billion. Breaking this down, £2.7 billion was spent on "structural treatment", £1.3 billion on "routine and other treatment" and £0.5 billion on "highways maintenance policy, planning and strategy".
Not Paying Road Tax?
Some vehicles have free Road Tax but still require the driver to tax the vehicle. Unless you have an exemption, such as being a disabled driver, you must pay Road Tax. Vehicles used to display a tax disc in their front window until 2014, which served as a usual reminder of when the tax was due and allowed for a quick visual check by a police officer. Nowadays, reminders are sent in the post or online with checks being carried out in real time online too.
Driving without road tax is a criminal offence and the police utilise technology such as Automatic Number Plate Recognition (ANPR) to catch those dodgy the tax. Vehicles can be clamped or seized and the driver can receive a fine of up to £1,000. As the old saying goes: "tax it, or lose it".
Road Tax and Leasing
When you lease a car, you do still pay road tax. However, all of the administration is done for you and there is no need to worry about applying, renewing, or forgetting to do either of these things. Road Tax/Road Fund Licence is included for the duration of the lease and included in your monthly payments. Should your rate of tax payable change, for example when the Government announce an increase, the leasing finance company will write to you, notifying you of the increased amount.
