Taxation

VEHICLE TAX in UK – Register the vehicle as SORN

Pre-requisite for a vehicle tax are:

  • V5C vehicle logbook
  • V85/1 for a Heavy Good Vehicle (HGV)
  • V5C/2 for a new vehicle that has just been bought

If a vehicle owner does not have any of these, then they need to apply for a brand new V5C. To get a new vehicle logbook, the owner will be obligated to fill a V62 form (form which can be purchased at a cost of £25.0). Additional documents needed include:

A valid Ministry of Transport (MOT) test – it has to be valid from the date the vehicle tax begin or the date the vehicle tax was issued, whichever is later

  • A valid Exemption Certificate – if an individual claims disabled vehicle tax
  • A legitimate Reduced Pollution Certificate – if the vehicle has been customised for reduced pollution
  • A valid GVT or PSVC – if either of these is required, it will be mentioned on the vehicle tax reminder

People residing in Northern Ireland need to have a valid paper copy of either a cover note or certificate of insurance.

Methods of paying tax

There are various methods of paying vehicle tax. As per the convenience of a vehicle owner, the following methods can be used to make the payment:

  • Cash payment (not applicable for payment made by post)
  • Credit Card (an additional handling fee of £2.50 is charged as car tax)
  • Payment made by cheque which is payable to Post Office Limited
  • Debit card or through direct debit
  • Postal Order
  • Post Office Budget Card
  • Sterling travellers cheques

If an individual is planning to take the vehicle off the road, he / she need to declare Statutory off Road Notification (SORN)

Register the vehicle as SORN

If an individual decides to take the vehicle off the road, he / she should inform Driver and Vehicle Licensing Agency (DVLA), organisation accountable for maintaining a database of drivers in Great Britain and a database of vehicles for the entire UK. For example, taking the vehicle off the road could mean that a person decides to keep it in a garage for a specific period of time. This is at times referred to as SORN. An individual is deemed to get a refund for entire period the vehicle is not being used. It is important to note that a vehicle can’t be used until it has been declared as SORN. The following steps should be taken for SORN:

  • Use the 11-digit number mentioned on the vehicle log book (V5C) in order to take the vehicle off the road instantaneously
  • Use the 16-digit number mentioned on the vehicle tax reminder letter (V11) in order to take the vehicle off the road starting the first day of next month (this number can only be used once)

Tax Rate

  • The registration date of a vehicle decides the rate of vehicle tax
  • Vehicle tax is paid according to the size of the engine if a vehicle was registered before 1 March 2001
  • Vehicle tax is paid according to carbon dioxide (CO2) emission and fuel type used if it registered on or after 1 March 2001

New vehicle tax rates applicable from 1 April 2017

The computation of vehicle tax has been altered for cars and some motor-homes that were original registered with DVLA from 1 April 2017. However, the change does not affect any vehicle registered before 1 April 2017. For the first year, vehicle tax is based on CO2 emissions. Post the first year, the amount of tax paid depends on the vehicle type. The rates are:

  • £140.0 for a year if the vehicles run on petrol or diesel
  • £130.0 for a year for substitute fuel vehicles (LPG, hybrids, and bio-ethanol)
  • No tax (£0) a year for vehicles with zero CO2 emissions

New vehicles costing more than £40,000

If a vehicle has a list price (price without any discounts) in excess of £40,000.0, the tax rate is based on CO2 emission for the first year. Post the first year, the rate depends on the type of vehicle and an additional rate of £310.0 a year for the subsequent 5 years. After 5 years, the vehicle will be taxed at one of the standard rates – £140.0, £130.0, or £0.0 (depending on vehicle type)

Also read:

The Uber tax guide by DNS Associates

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