Direct Line magazine

Road tax rule changes – what do they mean for drivers?

Updated on: 10 March 2020

An old tax disc is crumpled on top of a road tax letter

In October 2014, the Driver Vehicle Licensing Agency (DVLA) changed the rules around road tax for vehicles. The move was designed to modernise how vehicle tax is collected and to save the DVLA money in admin expenses.

But in the first six months after the changes were introduced the number of untaxed cars on the road increased and the amount of revenue from road tax or Vehicle Excise Duty actually diminished.

Here’s an outline of what the vehicle tax rules meant to regular drivers.

Road tax: the basic changes

Where the road tax used to belong to a vehicle, it now belongs to the owner of that vehicle. It means you can no longer sell a used car and include any remaining tax as a sweetener. The newer rules have also led to the abolition of the paper tax disc that used to be displayed in every car’s windscreen. Road tax is now policed by Automatic Number Plate Recognition (ANPR) cameras that match car registration plates with the DVLA’s database, flagging up cars whose owners haven’t paid for tax.

When you buy a car

Even if the owner says the car is taxed, that tax isn’t valid once you’ve taken ownership of the vehicle. If you want to drive a car you now own legally on public roads, it must be taxed in your name. That means if you’re buying a used car from a dealership, you need to tax it with the DVLA before you take delivery of the car. That tax will start at the beginning of the month in which you bought the car. If you’re buying a new car, road tax is sometimes included in the purchase price… but the dealership will need your insurance details to tax it in your name.

Read: How to renew your car tax online

When you sell a car

The rules around selling a car have become much stricter. You must now inform the DVLA as soon as you sell a car or you could face a fine of £1,000. The DVLA will then reimburse you for the remaining complete months of the tax you haven’t used. If it owes you money, the DVLA will send you a cheque within six weeks.

What if your car doesn’t need taxing?

There are some cars you don’t have to pay any road tax on. These are electric vehicles or models that emit less than 100g/km of carbon dioxide (CO2). You can also avoid paying road tax if you’re registered disabled or the vehicle was first registered before 1 January 1976.

However, owners of these cars still have to apply for vehicle tax.

What if you don’t tax your vehicle?

Anyone who’s caught driving an untaxed car will be issued with a non-endorsable fixed penalty notice. For the owners of untaxed vehicles kept on the road, the fine is £80 but it can rise to £1,000 for persistent offenders.

What about tax when test driving a car?

In order not to expose yourself to the chance of a fine, the vehicle you’re test driving must be taxed. If it’s a used vehicle you’re buying privately and it’s taxed in the owner’s name, that’s fine as long as you’re insured for it. If it’s from a dealership, it should be wearing what are known as trade plates (temporary registration plates). If the dealer doesn’t have trade plates, they must tax the vehicle to allow people to test drive it.

The downside is it adds another owner to the car, but rather that than a fine for driving without tax.

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