Car tax is mandatory whether you have purchased a brand new car or a used one. Through this article, we aim to learn about taxing a new car bought from a  car dealership. In addition to this, we will also explore how car tax for second-hand cars is paid by car dealers and what are documents that vehicle owners need to provide them with for this purpose. We will also discuss the calculation of car tax as well as some essential points to remember for new car owners.

How Do I Tax A New Car From A Dealer?

When someone buys a new car through a car dealership, the dealer usually arranges for the car tax to be paid, manages the paperwork on behalf of the car owner and adds the vehicle registration fee of £55 to the price of the car. 

The reason why dealers make sure that car tax is being paid while making a purchase is to avoid any legal issues that the car owner might face when driving an untaxed car on public roads. 

In this case, the dealer will require the following information to proceed with car tax payments:

  • Name of the vehicle owner
  • Address of the vehicle owner
  • V5C/2 registration or New Keeper Supplement of the vehicle

Car dealers can make car tax payments on your behalf in any of the following ways:

  • online 
  • over the phone 
  • at the local post office

Once your car tax is paid, the dealer will share your vehicle logbook or V5C registration certificate with you.

However, car tax payment is primarily the responsibility of the vehicle owner. Therefore, if the car dealer does not make car tax payment arrangements for you, you must make sure that your car tax is paid before your drive it away from the dealership premises. The same condition applies if you are purchasing a car privately.

In addition to car tax, you must also have a valid MOT certificate and car insurance paid before you drive your car on public roads.

If you need to tax a new car on your own, you will need to fill out a V55/4 form. This form can also be used to tax new imported vehicles and newly-built (kit) cars. When applying for your car tax, you will need to prove your identity either using a copy of your driving licence. Otherwise, you can also use the following documents:

  • birth certificate
  • current UK paper driving licence (not a paper counterpart)
  • marriage certificate
  • decree nisi or absolute
  • passport

How To Tax A Used Car From A Dealer?

When you purchase a car from a car dealer, they can and usually do make arrangements to have your car registered to your name and have the car tax paid. The amount paid for the car tax and any other registration fees incurred by them is added to the cost of the car and the final price quoted to you. If this is not the case, you can ask them to do so.

In the case of a second-hand car, the previous owner needs to add your name (and other details) to the “new keeper” section of the V5C and send it to the Drivers And Vehicles Licensing Agency. They will give you a green slip that you need to keep safe as it is the proof of your ownership of the car until the car log book certifies it through the DVLA. You can use the 12 digit number that appears on your green slip (also termed as your V5C2 reference number) to pay your car tax while you are waiting for your car logbook to be renewed/transferred to your name.

The DVLA will send you an email as soon as your vehicle has been registered in your name and a new vehicle logbook is posted to your address. It usually takes 2 to 4 weeks for a new V5C to be sent to new owners by the DVLA. if it takes more time than this, you can apply using a V62 form through your local post office.

How Long Does It Take For Car Tax To Show Online?

According to the Driver and Vehicle Licensing Agency (DVLA), it can take up to 5 working days for renewed car tax to show online. Car tax payments can be made through local post offices registered to handle car tax services. You may use a debit card, credit card or direct debit facility to make your car tax payment(s).

To pay your car tax online from the post office, you will need the following documents;

  • Your V11 letter
  • An MOT test certificate
  • The amount of payment mentioned in the V11 letter

In the case of debit or credit payments, you will be charged an additional surcharge of 5 per cent; unless you pay the full amount of car tax on an annual basis in advance. The DVLA takes monthly payments for car tax on the first day of each month. However, car owners can choose to make car tax payments on a monthly or six-monthly basis.

You can check the status of your car tax payment via the DVLA’s Vehicle Enquiry System. At the same time, you will get an update regarding the insurance payments of your vehicle as well.

What Is The V5C2 reference number?

The V5C2 reference number is a 12 digit numeral that appears on the green slip that is handed over to new owners of vehicles. You can either be purchasing a brand new car or simply being transferred ownership from a previous owner while buying a used car. In both these cases, the green slip or V5C2 indicates a transfer of ownership and serves as proof of your ownership of the car.

You can use the 12 digit number that appears on your green slip (also termed as your V5C2 reference number) to pay your car tax while you are waiting for your car logbook to be renewed/transferred to your name.

You may only be able to pay your car tax only if the vehicle is registered in your name and you can provide any of the following documents to prove your ownership of the car:

  • your V11 reminder notice which states the vehicle owner’s name and the amount of car tax due for the next tax term
  • a V62 logbook application form which shows that you have applied for a V5 while the previous one has gone missing
  • a V5C/2 Green slip that is issued to new car owners while the ownership of their vehicle is transferred from the previous owner

When someone purchases a new vehicle, they must assure that they have been handed over the new owner’s greens slip or a tear-off of the V5C2 new keeper details to serve as proof of the ownership of the vehicle in use.

How Much Road Tax Do I Have To Pay?

Road tax or Vehicle Excise Duty in the UK is calculated on the basis of a few factors including the engine size and CO2 emissions of the car.

However, the UK road tax system is divided into two separate rates. The first rate applies during the first year of a car on the road when its CO2 emissions are also accounted for while calculating the tax rate. It may range from £0 for zero-emission cars to £2,245 for cars that emit 255g/km or more.

From the second year onwards, the CO2 emissions will not account for road tax, rather the original cost of the car will be considered for calculations.

Cars that are valued at or above £40,000 will be taxed a further £335 annual supplement that runs for five years. After this time-lapse, they will be taxed at the current tax rate applicable during the tax term.

The current (2021-22) road tax is set at a flat rate of £155. This is an increase from £150 in the 2020/2021 financial year) to adjust for inflation. There’s a £10 annual discount for alternatively fuelled vehicles such as hybrids, mild hybrids and plug-in hybrids. Therefore, their owners pay £145 annually.

Conclusion:

Most of the time when a vehicle is purchased from a car dealer they make car tax payments on behalf of the new owner and the processing fee of £55 to the total price of the car. For this purpose, they require documents to prove the identity of the car owner. Car tax payment and vehicle registration can conveniently be carried out at a local post office that deals with car tax.

FAQs: How Do I Tax A New Car From A Dealer?

Can I tax a car online if I have just bought it?

Yes, you can tax your car online if you’ve just bought it as long as you have your V5C. In the case of a brand new car, first, check with your dealer/seller if they have built-in the car tax with the price of the car. In the case of a second-hand car, you can use the 12 digit number that appears on your green slip (also termed as your V5C2 reference number) to pay your car tax.

Can I tax my car while waiting for the logbook?

Yes, you can tax your car while waiting for your car logbook. Payments can be made through local post offices registered for car tax. You may use a debit card, credit card or direct debit facility to make your car tax payment(s). You will need either your V11 reminder notice, a V62 logbook application form or a V5C/2 Green slip that is issued to new car owners while the ownership of their vehicle is transferred from the previous owner.

Can you drive a car home from a dealer without tax?

Unless you are driving your untaxed car to a prebooked MOT test, you cannot drive an untaxed car on public roads. Therefore, it is best to make sure that your vehicle’s tax is paid before you drive it away from the car dealership site.

How do you tax a car that you have just bought?

Usually, car dealers arrange to have car tax paid and registered to your name while making the sale. They will add this amount and any registrations, and fees incurred during the transfer of ownership of the car to the price of the vehicle and charge it to the new owners.

Where is the 12 digit reference number from the new keeper slip?

The 12 digit reference number from your new keeper slip is taken from the 11 digit reference number in your V5C or vehicle logbook. If you are unable to find it, you can contact the DVLA with your vehicle registration number, the vehicle make, model and colour, and your full name and address with a request to share access.

References:

Car road tax: your guide to Vehicle Excise Duty (VED) | Parkers

How do you tax a car you’ve just bought? – Confused.com

How do I transfer ownership and tax for a used car I’ve bought? | AutoTrader

Road tax rule changes – what do they mean for drivers?

Vehicle registration: New and used vehicles – GOV.UK

Vehicle registration: New registrations – GOV.UK

How To Tax A Second Hand Car Uk? – ictsd.org

Buy-a-vehicle

How To Tax Your New Car Online With Green Slip V5C/2 (2020) GOV.UK

Tax your vehicle

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