Vehicle Excise Duty (VED), commonly known as road tax, is a mandatory annual charge that motorists in the UK must pay to keep their vehicles legally on the roads. The amount you pay depends on factors like your vehicle’s age, emissions, and fuel type. VED aims to encourage the use of cleaner vehicles by making it more expensive to own older, less efficient cars.
For example, if you have a brand-new diesel car that emits 130 grams of CO2 per kilometre, you will pay a higher rate of £165 in the first year. After the first year, this drops significantly to £45 for subsequent years. However, owning an older, high-emission vehicle could mean paying several hundred pounds annually.
VED matters because failing to pay it can result in hefty penalties and your car becoming unroadworthy. The DVLA sends out reminders when your VED is due, but it’s up to you to ensure the payment is made on time. Non-payment can lead to fines or even a ban from driving if you continue to use an uninsured vehicle.
VED rates are regulated by HM Revenue & Customs (HMRC) and detailed in legislation such as The Vehicle Excise and Constraint Emissions Act 2015, which introduced changes like the zero-emissions car banding system. This act ensures that VED aligns with government policies promoting greener transport options.
To avoid any issues, it’s a good idea to set up an automatic payment through DVLA Direct. This way, you won’t miss the deadline and can stay compliant without worrying about late payments or penalties.
How This Relates to the FCA Redress Scheme
The FCA motor finance redress scheme covers 12.1 million agreements with an average compensation of £829 per agreement. The total cost to firms is £9.1 billion. If you had PCP or HP finance between 6 April 2007 and 1 November 2024, you may be eligible. The final deadline to complain is 31 August 2027. You do not need a claims management company.