Road Tax FAQs

When was the first disc issued?

The 1861 Locomotive Act introduced taxation of all steam-powered vehicles, and was followed in 1903 by the Motor Car Act, which set an annual registration of £1 for cars – around £74 in today’s money. The displayable tax disc was introduced in 1919, when the law stated that it must be on show at all times.

How much tax is generated?

The treasury makes an estimated £4.6bn a year from vehicle excise duty, but tax evasion is estimated to cost £217million in lost revenue. In the 2006-07 financial year, it was estimated 2.19 million untaxed vehicles were being driven on the UK roads – that’s one in every 15 cars.

Are classic cars exempt from tax?

Firstly, cars registered before the 1^st March 2001 don’t use the CO2 based system. If your car’s engine capacity is less than 1.550cc, you pay £120 a year, while those above £185 a year. Vehicles built before the 1^st January 1973 qualify for a free tax disc under historic vehicle legislation.

What’s in store in the future?

From April 2010, Vehicle tax rates for cars registered on or after 1 March 2001 are split into 13 bands depending on CO2 emissions. The amount you will pay depends on which band your car comes under.

There will also be the introduction of ‘first year’ rates which will be eligible for new cars when they are first registered. These will be higher than the second year’s road tax as they are designed t create a greater incentive to car buyers to select the greenest cars.

Car registered on or before March 1, 2001 will continue to be charged based on their engine sizes. They either pay either £125 if they are not over 1549cc or £205 for those above 1549cc.

Expect further revisions to road tax to create a greater penalty against high-polluting cars in the future.

For more information, visit: www.direct.gov.uk