How To Calculate Car Tax

By CarsFellow 8 Min Read

What is the Car Tax?

Raise your hand if you have had the experience of happily saving enough to buy a decent car. Still, when the payment comes, the retailer highlights tax that becomes the reason for our disappointment.

Yes, this additional amount that is not part of the sales amount is called Vehicle excise duty (VED). It is the amount you pay to the government in exchange for being able to drive around on the roads, the traffic signals you cross, etc.

The car tax rate differs from the type of car and its brand. A small vehicle that runs on lesser fuel has a different tax rate than a land cruiser, which runs on diesel power.

Why all Cars Pay Different Car Taxes?

Many people are initially surprised to witness how one car has a different tax than the other vehicle they own. This is because the car tax is based on several factors that differ from one car to another. Here is the list.

  • Engine size
  • CO2 emissions
  • The date when the car was registered
  • Whether the vehicle has a trade license
  • Is the vehicle imported or manufactured in your own country

These are some of the significant factors that decide how much the car rate would be. Motorbike owners have to pay a much smaller tax than a truck.

Moreover, several countries in which the purpose behind the vehicle being operated are also crucial in deciding how much the car tax will be. If the car is being used for commercial purposes, the tax rate will differ from the vehicle that is being used for users’ privacy reasons.

The cars that are manufactured in your own country require lesser tax during the time of purchase. However, there are several occasions when a car company may import some heavy-duty parts which add up to the price.

The Types of Car Taxes we all Need to know About

As mentioned above, the rate and amount of car tax do not only vary depending upon the car itself; it is different in one state and can vary from country to country.

However, one thing that cannot be ignored is that the car tax is there and cannot be avoided. Therefore, it is essential to know what you will be expected when purchasing your car.

· Personal Property Tax

This is the tax that is paid every year by individuals owning any property. Property Tax is also with houses, ventures, land, etc. In several countries, not paying the property tax on time leads to additional charges which the government takes note of.

· Sales Tax

This is the type of car tax that is common in most countries and, unfortunately, cannot be ignored. This is the tax that has to be paid when the owner of the vehicle changes. As new papers are made regarding the ownership of the car, a sales tax must be paid.

There are some countries where sales tax is omitted if the car has been passed on to family members or have been given as a present. Therefore, it is always a wise choice to know tax criteria in your state to educate yourself.

Is it Essential to Pay Car Tax?

The need to pay regular car tax is critical and cannot be ignored. The tax collected by the government is used for road maintenance or further construction purposes, which is why it must be taken seriously by all the citizens.

The consolidation fund of our country is also dependent upon this car tax. The roads and further infrastructure are maintained through this car tax. The health sector and other ventures of our country require funding, and this is where this VED comes in handy.

The primary reason why government issues car tax on its citizens is to give them a sense of responsibility. It is important to value what you have, which is why paying a regular amount of money for your property will increase its value and remind you of its maintenance.

Cars that Do Not Have to Pay Tax

There are always a few exemptions to every restriction or rule. In most countries, if you are driving or parking your car, you are required to pay car tax regularly. However, here are some significant exclusions where VED is not applicable.

· When the Owner of the Car is Physically Challenged

There is always room to spare yourself from car tax if you are a disabled person who faces some physical challenges. The vehicle must be registered on the disabled person.

· If your Vehicle is Providing Services to Disabled Personals

The following criteria where car tax is excluded if you are providing services of pick or drop to people who are physically challenged. Ambulances still have to pay this tax; the health authorities are held accountable to pay it yearly.

· Vehicles that are Used for Agriculture Purposes

Agriculture vehicles are the ones that are used off-road, only on the farm. These vehicles do not travel on the road, which is why their tax is also not applicable.

· Old Vehicles

There are several vehicles with more than forty or thirty vehicles. If you own them, you don’t have to pay this tax. These cars are considered historical and classic, which is why the government has given relaxation.

· Vehicles with Limited Power Speed

Vehicles like electric wheelchairs and scooters with a maximum speed of 8mph do not have to pay any car tax. However, it is important to note that these vehicles must limit their speed to 4mph while they are on the footpath for others’ safety.

Car tax holds major significance, like every other property that we own. Therefore, before purchasing any vehicle, we need to sit down with the retailer and educate us on this matter.

It is also essential to know how much we need to pay for the vehicle we own and when exactly. Keeping a track will surely help us make sure the tax submitting date is not missed.


If you have been paying your car tax regularly, selling your car will have more value than the one whose charge has been missed a couple of times before.

Note that in several countries, one cannot sell his car before all the tax dues are met. The owner shift cannot be made before all every tax has been paid.

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