When Does a Tax Exempt Car Need Taxing?
If you possess a vehicle that previously qualified for an exemption from Vehicle Excise Duty (VED), often referred to as 'car tax', and its circumstances change, you will need to tax it. This transition is most commonly encountered when the criteria for the exemption are no longer met. For instance, a vehicle used by someone with a disability might lose its exemption if the registered keeper or eligible user's circumstances change, or if the vehicle is no longer used solely for the disabled person. Similarly, vehicles that were historically exempt due to their age (e.g., pre-1983 vehicles) are now taxed based on their CO2 emissions, requiring them to be taxed if they weren't already. The process involves notifying the Driver and Vehicle Licensing Agency (DVLA) and making the appropriate tax payment.
- Tax is required when exemption criteria are no longer met.
- DVLA must be notified of changes in vehicle status.
- Age-based exemptions have largely been replaced by emissions-based taxation.
Failing to tax a vehicle when it becomes liable can lead to penalties, including fines and potential impoundment. It is your responsibility as the registered keeper to ensure the vehicle is taxed correctly and on time, whether it's a new purchase or a change in its exempt status.
Common Reasons for Tax Exemption
Vehicles can be exempt from VED for several key reasons, and understanding these helps clarify when an exemption might cease. The most frequent categories include:
- Disabled Passengers Vehicle (DPV) Exemption: For vehicles used to transport disabled persons who receive a War Pension Mobility Supplement or the higher mobility component of Disability Living Allowance (DLA) or Personal Independence Payment (PIP). The vehicle must be registered in the disabled person's name or used solely for their needs.
- Historic Vehicles: Vehicles registered before 1 January 1983 are automatically exempt from VED. However, this exemption is conditional on the vehicle being used appropriately; if it's used for commercial purposes or no longer meets the definition of a 'historic vehicle' for tax purposes, it may need taxing.
- Electric Vehicles: Fully electric vehicles are currently exempt from VED. This exemption is due to policy changes, and it's important to note that this could change in the future.
- Tractors and Other Specific Vehicles: Certain agricultural vehicles or specialised vehicles may also be exempt under specific legislation.
The key to taxing a previously exempt car lies in identifying which exemption category it belonged to and understanding the specific rules that govern its cessation. For example, if a DPV is sold to someone who is not eligible for the exemption, or if the eligible user's circumstances change, the exemption is no longer valid.
The Process of Taxing Your Previously Exempt Car
So, how do you go about taxing a car that was once exempt? The process is largely the same as taxing any other vehicle, but you need to ensure you have the correct documentation and that the DVLA is aware of the change in status. You cannot simply start taxing it online or at the Post Office without addressing the cessation of exemption first.
Step 1: Notify the DVLA of the Change
The most critical first step is informing the DVLA that your vehicle is no longer eligible for its tax exemption. If the exemption was based on disability, you must notify the DVLA that the vehicle will no longer be used under that exemption. This is often done by completing a specific form or by contacting the DVLA directly, especially if the exemption was linked to a specific allowance. For historic vehicles, if the vehicle's usage changes or it's modified in a way that disqualifies it, you must update the DVLA. For electric vehicles, the exemption is automatic if the vehicle meets the criteria, but if it's converted or modified, its status might change. You need to ensure the DVLA record reflects that the vehicle is now liable for VED.
Step 2: Obtain or Update Your Vehicle Registration Certificate (V5C)
Your V5C log book contains vital information needed for taxing. If the exemption was noted on your V5C, or if the DVLA requires an update due to the change in status, ensure you have the most current V5C. If you've sold the car and the new keeper is not eligible for the exemption, they will need the V5C to tax it. If you've changed the vehicle's usage or classification, the DVLA may issue a new V5C. You can usually tax a vehicle without the V5C, but you'll need the 11-digit Vehicle Identification Number (VIN) from the vehicle itself and your 12-digit National Insurance number or a V5C/2 (new keeper slip) if you've recently bought it.
Step 3: Check Your Car Tax Cost
Once the DVLA is aware the vehicle is liable for tax, you can determine the cost. This depends on several factors, including the vehicle's age, engine size, fuel type, and CO2 emissions. For newer cars, the tax is based on their CO2 emissions, with zero-emission vehicles (like fully electric ones) often paying zero tax. Older vehicles, especially those registered after 1 March 2001, fall into different tax bands based on their emissions. For vehicles registered before 1 January 1983, they are generally exempt, but as noted, this isn't absolute if usage changes. You can check how much your car tax will be using the DVLA's online service if you have the vehicle registration number.
Gather Your Documents: Before starting the taxing process, ensure you have your vehicle registration number, the 11-digit Vehicle Identification Number (VIN), and your 12-digit National Insurance number ready. If you have a V5C, have that to hand as well.
Step 4: Make Your Tax Payment
With the DVLA notified and the tax cost determined, you can now pay. This can be done online via the GOV.UK website, by calling the DVLA vehicle tax service, or at a Post Office branch that offers vehicle tax renewal. You can choose to pay monthly (by direct debit), six-monthly, or annually. Annual payments are typically the cheapest overall. Ensure you complete the process correctly, as incomplete applications can lead to further issues.
It is crucial to address the change in exemption status with the DVLA before attempting to tax the vehicle. They need to update their records to show the vehicle is now liable for VED.
Understanding Historic Vehicle Taxation
The rules for historic vehicles have evolved, and understanding them is key if your previously exempt car now needs taxing. Prior to 1 April 2017, vehicles manufactured before 1 January 1973 were automatically exempt from VED. Since this date, the exemption applies to all vehicles manufactured before 1 January 1983, but with a crucial condition: they must be used in a manner consistent with their historic nature. This means they should not be used for commercial purposes or significantly modified in a way that negates their historic classification for tax purposes.
When Does a Historic Vehicle Need Taxing?
A vehicle registered before 1 January 1983 is generally exempt. However, the exemption is lost if:
- The vehicle is used commercially (e.g., for deliveries, as a taxi).
- The vehicle is modified substantially, altering its original characteristics and thus its historic status for VED.
- The registered keeper fails to update the DVLA regarding changes in the vehicle's status or usage.
If your historic vehicle falls into one of these categories, or if it was manufactured after 1 January 1983, it will need to be taxed. You will need to check its VED band based on its engine size and fuel type, as newer vehicles (even those built between 1983 and 2001) may still fall into taxable categories. The DVLA's online service can help you determine the specific tax cost based on your vehicle's registration number.
The Tax Disc Is No Longer Mandatory
It's worth noting that since 1 October 2014, the physical tax disc displayed on windscreens was abolished. Vehicle tax is now recorded digitally. This means you don't need to display anything; the DVLA's system will show whether your vehicle is taxed or not. However, this digital system relies on correct registration and notification of changes, making the DVLA notification step even more vital when moving from exempt to taxable status.
If you're unsure about your historic vehicle's status or its current tax requirements, the GOV.UK website provides detailed information on VED, including specific rules for historic vehicles and how to check if your vehicle requires taxing.
Taxing Vehicles Previously Used for Disability Benefits
Vehicles used by individuals receiving certain disability benefits have long enjoyed an exemption from VED. This is a crucial concession designed to support those with mobility needs. However, this exemption is tied directly to the recipient's eligibility and the specific use of the vehicle. If the circumstances change, the exemption is no longer valid, and the vehicle must be taxed.
Eligibility for the Disabled Passengers Vehicle (DPV) Exemption
To qualify for the DPV exemption, the vehicle must be registered in the name of the disabled person or the person who receives the mobility allowance on their behalf. The vehicle must also be used solely for the transport of that disabled person. The qualifying mobility allowances are:
- The higher rate mobility component of the Disability Living Allowance (DLA)
- The enhanced rate mobility component of the Personal Independence Payment (PIP)
- A War Pension Mobility Supplement
If the vehicle is no longer used for the disabled person, or if the person no longer receives one of these qualifying allowances, the exemption ceases. For example, if a child receiving DLA no longer qualifies as they reach a certain age or their condition changes, or if they pass away, the vehicle becomes liable for tax.
What Happens When the Exemption Ends?
When a vehicle is no longer eligible for the DPV exemption, the registered keeper must inform the DVLA. This is typically done by completing form V21. The DVLA will then issue a new V5C registration certificate if necessary, and you will be informed of the tax class the vehicle now falls into. You will then need to tax the vehicle at your earliest convenience. You can do this online, by phone, or at the Post Office. If you are unsure about the exact process or required forms, contacting the DVLA directly is advisable.
The cessation of a disability benefit entitlement is the most common trigger for needing to tax a previously exempt vehicle in this category.
It is essential to act promptly once you know the exemption is no longer valid. Continuing to use a vehicle that should be taxed, even for a short period, can result in fines and penalties. The DVLA's records are digital, and non-taxed vehicles are flagged automatically.
Electric Vehicles and Future Tax Implications
Currently, fully electric vehicles (EVs) are exempt from paying Vehicle Excise Duty (VED). This policy is in place to encourage the adoption of greener transport and reduce emissions. The exemption means that owning and running an EV can be more cost-effective in terms of annual vehicle taxation compared to traditional petrol or diesel cars.
How the Exemption Works
To benefit from the exemption, the vehicle must be a 'reliant electric vehicle' – meaning it must be powered solely by electricity. Plug-in hybrid vehicles may qualify for a reduced rate of VED, but fully electric models are typically fully exempt. You still need to declare your vehicle as electric when you first register it or change the keeper. The DVLA's system automatically applies the exemption based on the vehicle's CO2 emissions rating, which for EVs is zero. However, you still need to complete the annual renewal process, even though no tax is payable.
Potential Changes to EV Taxation
While EVs are currently tax-exempt, this is a policy decision that could change in the future. As more EVs enter the market and become a significant proportion of the vehicle fleet, governments may look to introduce VED for EVs to contribute to road maintenance and fund public services. This is a common discussion point among policymakers. Any changes are usually phased in, and drivers are given advance notice. It's wise for EV owners to stay informed about government transport policies and potential future taxation changes. You can check the latest information on GOV.UK.
If you're considering buying an EV and the exemption is a key factor in your decision, it's prudent to factor in the possibility of future VED becoming payable. The cost savings from the exemption are a significant benefit now, but the landscape of vehicle taxation is evolving.
The transition from a tax-exempt status to a taxable one is a common scenario, particularly as vehicle technologies and exemption criteria evolve.
What If I Don't Have My V5C? Taxing Without It
If you need to tax a vehicle that was previously exempt, but you no longer have your V5C registration certificate, don't worry. While having the V5C makes the process straightforward, it's not the only way to tax your vehicle. The DVLA provides alternative methods for taxing your car when you don't have the log book to hand.
Using Your Vehicle Identification Number (VIN)
If you've recently purchased the vehicle and only have the V5C/2 (new keeper slip), or if you've lost your V5C entirely, you can still tax the vehicle using its 11-digit Vehicle Identification Number (VIN). This number is a unique identifier for your car and can be found on various parts of the vehicle itself, such as the dashboard (visible through the windscreen), on a sticker in the doorjamb, or on the chassis. You will also need your 12-digit National Insurance number.
How to Tax Online Without a V5C
The easiest way to tax without a V5C is online via the GOV.UK website. You will need the vehicle's registration number, its 11-digit VIN, and your 12-digit National Insurance number. Follow the prompts on the DVLA's vehicle tax service. You will be guided through confirming your vehicle details and making the payment. If you've recently bought the vehicle and have the V5C/2 slip, this can also be used instead of the full V5C.
Alternative Methods If Online Isn't Possible
If you cannot tax online, you can also do it by phone. Call the DVLA vehicle tax service and have your vehicle registration number, VIN, and National Insurance number ready. They will process your application over the phone. If you cannot tax online or by phone, you can visit a Post Office branch that offers vehicle tax services. You will need to bring your V5C/2 (new keeper slip) if you have one, or the 11-digit VIN and your National Insurance number. The Post Office staff can look up your vehicle details and process the tax for you.
Always ensure you are using official DVLA channels to tax your vehicle to avoid scams and ensure the tax is correctly registered.
What If I Paid Too Much Tax? Car Tax Refund
It's possible, in certain circumstances, to be eligible for a car tax refund. This most commonly occurs when you have overpaid tax or when your vehicle becomes exempt from VED part-way through a tax period for which you have already paid. Understanding when you might be due a refund and how to claim it is important.
Circumstances for a Car Tax Refund
You are generally eligible for a refund if you have declared your vehicle off the road using a Statutory Off-Road Notification (SORN) part-way through a paid tax period. You can also receive a refund if you sell your vehicle and notify the DVLA of the sale. The refund will be for any full remaining months of tax. For example, if you have paid for 12 months of tax and declare your vehicle SORN or sell it after 6 months, you should be entitled to a refund for the remaining 6 months.
Another scenario, though less common now with automatic exemptions for new vehicles, is if your vehicle suddenly becomes eligible for an exemption (e.g., qualifying for disability exemption) and you've already paid tax. In such cases, you would need to notify the DVLA and apply for a refund for the period the exemption should have been active.
How to Claim a Car Tax Refund
To claim a refund, you must inform the DVLA that you are no longer liable for tax. This is done by either:
- Declaring your vehicle SORN.
- Notifying the DVLA of a change of keeper (e.g., selling the vehicle).
The DVLA will automatically calculate any refund due based on the date they receive your notification. The refund is usually sent as a cheque. If you've paid by Direct Debit, cancelling your Direct Debit might be necessary. If you believe you are due a refund but haven't received it, or if you need to clarify your eligibility, you should contact the DVLA directly. They can confirm the status of your refund and advise on any further steps required.
Ensure that when you sell a vehicle or declare it SORN, you do so promptly. The refund is calculated from the date the DVLA receives your notification, not from when the event occurred.
Frequently Asked Questions About Taxing Exempt Vehicles
Here are answers to common questions people have when their vehicle's tax-exempt status changes.
Do I need to tax a historic car if it's not used often?
Yes, if your vehicle was manufactured between 1 January 1983 and 1 March 2001, it needs to be taxed. Even if not used often, if it's registered after 1983, it's generally liable for VED unless it meets specific criteria for other exemptions.
What if my disability benefit stops? Do I need to tax the car immediately?
Yes, you must inform the DVLA as soon as your eligibility for the qualifying mobility allowance ends. The vehicle then becomes liable for tax, and you should arrange for it to be taxed promptly to avoid penalties.
Can I tax an electric car even though it's exempt?
You must still complete the annual vehicle tax renewal for an electric car, declaring it as being zero-emission. While no tax is payable, the renewal process ensures the DVLA's records are up-to-date. Failure to renew could lead to issues.
How do I change my address with the car tax service?
You should update your address with the DVLA for your driving licence and vehicle registration. This ensures you receive all relevant correspondence, including tax reminders and VED renewal information. You can update your address online via GOV.UK or by post.
What is the difference between SORN and taxing a car?
SORN (Statutory Off-Road Notification) means you declare your vehicle is not being used or kept on a public road. This exempts you from needing to tax it. Taxing means the vehicle is licensed for use on public roads and is subject to VED payments.
Can I cancel my car tax if I sell my car?
When you sell your car, you must inform the DVLA. This process automatically cancels the tax. You may be eligible for a refund for any full remaining months of tax if you paid for a longer period.
Where can I check my car tax cost if my car is no longer exempt?
You can check your car tax cost on the GOV.UK website using your vehicle's registration number. The DVLA's online service will tell you how much tax is due based on your vehicle's specifications.