Vehicle Excise Duty

Vehicle Excise Duty (VED) (also known as vehicle tax, car tax and road tax) is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used (or parked) on the public roads in the United Kingdom. Vehicles used on public roads should display a current vehicle licence (tax disc) as proof of payment which will not be issued without prior proof that the vehicle has valid MOT and insurance. A Statutory Off Road Notification (SORN) must be made for a registered vehicle that is not being used on the road, and which has been taxed since 31 January 1998. VED, which is collected and enforced by the Driver and Vehicle Licensing Agency (DVLA), raised GB£5.63 billion in 2009.

Vehicle tax was introduced in the 1888 budget and the current system of excise duty applying specifically to motor vehicles was introduced in 1920. This excise duty was ring-fenced for road construction and was paid directly into a special Road Fund from 1920 until 1937 after which it was treated as general taxation. Even during this period the majority of the cost of road building and improvement came from general and local taxation due to the tax being too low for the upkeep of the roads.