Road Tax – How It Affects You

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The first thing to be aware of is that road tax, as many people conceive it, doesn’t exist in Britain and hasn’t since 1937. When most people say road tax, they actually mean VED—Vehicle Excise Duty. This may sound like semantics, but it’s the reason why certain groups—cyclists among them—do not have to pay it. VED is based on emissions rather than simply the use of the road. Generally, upkeep and maintenance of the road is paid for by a mixture of local council taxes and income tax.

So what is VED? This tax is calculated by a number factors, including the size of the vehicle, when it was registered, whether it is for commercial or private use, the volume of CO2 emissions, and the fuel type. Those vehicles that cause greater damage to the environment when driving pay more. However, this method of calculation is slightly problematic, as a driver who seldom drives their high-emission vehicle will be taxed more (in terms of this particular tax) than one with a vehicle with smaller emissions who drives every day.

It is difficult to report exactly what the money gathered from VED goes towards, as all the money paid to the DVLA goes to the Exchequer to be combined with other taxes (such as corporation and income tax) and spent on services. Thus, despite discussions about what road tax is needed for, it is difficult to disentangle it from the other incomes and outgoings incurred in our society.

In the case of other taxes on road vehicles, such as the Congestion Charge in London or council parking fees—the money is more likely to stay within the jurisdiction of a local authority. In these cases, it is easier to see how they might affect you. For example, the money raised from parking permits could help go towards general improvements to the local roads, new traffic lights, or safety features. However, since the money spent by local authorities is topped up by central government, these are things that everyone pays for rather than just the people who use the roads.

One thing that road tax does go towards is the building of large scale infrastructure projects, such as  bridges. Often, these are done in partnership with private firms. Money may then be raised retroactively to pay back the costs of these projects by tolls. For example, the Humber Bridge in North Lincolnshire initially charged every motorist £3 to cross, a sum which was reduced to £1.50 after a proportion of the bridge’s debts had been paid off.

Many motorists complain about road tax, as there are many other taxes levied on driving. Petrol costs have increased dramatically over the past decade due to fuel duty, and drivers are responsible for numerous other charges that don’t apply to other road users such as cyclists. Licenses, MOTs and insurance all add up, although these costs can be kept lower by measures such as choosing UK multi car insurance in the UK.