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What Does Road Tax Pay For?

By: J.A.J Aaronson - Updated: 3 Nov 2017 | comments*Discuss
 
Road Tax Car Tax Tax Government Spending

Vehicle Excise Duty (VED) is more commonly known as road tax and is a perpetual source of political contention. The majority of adults in the UK are either car owners or regularly use a car or other vehicle, so road tax affects most of us. Furthermore, aside from the standard road tax payable to the DVLA and proved by your tax disc (which must be displayed in your windscreen), motorists are also hit by fuel duty, council parking charges, congestion charges, and all manner of other taxes.

So Where Does All the Money Go?

This is not a particularly easy question to answer. Frequently, tax rises are presented as necessary in order to cover the cost of a related expenditure. For example, the London Congestion Charge was supposed to pay for new upgrades to the Underground network. However, there is really no way of telling whether or not this is the case, as all tax income ultimately ends up in one of two places, depending on the tax.

DVLA Road Tax and fuel duty both end up in the coffers of the Exchequer, along with your income tax and companies' corporation tax. Council parking fees, along with the Congestion Charge if you live in London, are paid to the Local Authority, and are topped up by council tax and a subsidy from central government.

As can be seen, it is therefore very difficult to detail exactly how your road tax is spent, because it is divvied up in the same was as any other tax. However, there are certain related expenditures that we certainly rely on road tax and fuel tax to pay for.

Infrastructure Projects

Infrastructure projects are among the most important motoring-related expenditures. These include new road building and widening, tunnel construction and so on. These projects are frequently carried out in partnership with a private company, using a system known as a Private Finance Initiative (PFI). There are a number of notable PFI infrastructure projects including the Skye Bridge, for example.

Private Finance Initiatives are a useful tool for the government, as they allow massive new infrastructure projects to take place 'off balance sheet' – that is, the cost of these projects does not contribute to the national debt. PFIs have, however, ground to a halt in recent months as the private sector is finding it increasingly difficult to secure funds to carry out the projects.

Local Government Projects

Motoring taxes paid to a council are more easily traced to their eventual expenditure, as the projects they pay for tend to be concentrated in a smaller area and therefore more visible to residents. For example, your parking fees might well help pay for extended car park facilities, while your resident's parking permit is probably contributing to road resurfacing or a similar project. As has been mentioned, though, council income is topped up by central government – so,ultimately, you are also paying for these projects and services through your Council Tax and Income Tax.

Many drivers complain that the costs of driving are unfairly inflated by tax, particularly in the price of petrol. There may be some truth in this; driving is an easily taxable activity, because it is a necessity for many and individuals do not see the cost coming directly from their wage packet. However, it should be remembered that without these taxes both central and local government would find it even more difficult to carry out the infrastructure and repair projects on which a modern society relies.

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@JillyDancer - potholes have become my bugbear - they are TERRIBLE in Liverpool. you can't go 100 yards without the car falling into one. Something will have to be done, they cannot keep patching them. It's like attempting to put a sticking plaster on a gunshot wound!
BiGJan - 7-Nov-17 @ 3:34 PM
To those who say VED pays for roads. There is no direct payment, it goes into a general pot. So you think you are paying a disproportionate amount? Well, consider this please.. Almost all the damage done to infrastructure is caused by vehicles. Same for pollution. Now let's say I don't drive and walk most places..on longer journeys I ride a push-bike. I am paying for roads indirectly, through general taxation. I am paying for all the damage and pollution I have no caused. Do I get a rebate? Does everyone else in the same position? Now compare that huge figure with how much more you think you are really paying than pedestrians and cyclists. Even if I used an electric car, I am still causing damage. So in the future when electric cars become more popular we are still going to be in a similar position. If anything, I suggest everyone here stands together in holding the government to question over where this loss of revenue (from less pollution) is going to come from. A hike in general taxation, that's where, in my opinion. We are ALL going to get stung. Now add to this the state of public transport in this country..what is going to be done about that? Especially when this government insists on increasing the population by a factor of millions through one form or another. But if you want to keep fighting between yourselves then fine..just remember who you are all really fighting for (it's not you).
JillyDancer - 3-Nov-17 @ 7:59 PM
I think it is highly wrong of you to mislead the public by constantly referring to a non-existent tax (road tax). The tax paid on cars is based on emissions - there is no tax on roads, no fee, and no more entitlement to our roads than others. We all fund roads. By referring to a non-existent tax your only serving to confuse and in worse cases, polarise viewpoints including those who take to our roads thinking they have a right to force other people out the way by any means necessary. It helps nobody.
Jeka - 3-Nov-17 @ 7:49 PM
@Pothole dodger - I so know what you mean here. There just seems to be more and more and they are deeper and deeper. Try driving through the outskirts of Liverpool, it's like an assault course!
JoJ - 6-Oct-17 @ 2:13 PM
Why is the government fraudulently charging us for road tax when the roads are a disgrace Before I leave my house I have to plan a route to try to avoid the ridiculous state of the roads in Huddersfield . I’m forever putting new ball joins and bushes on my vw van, of course we all know what’s happening to our hard earned road tax money it’s the dirty thieving government throwing champagne dinners and giving each other back handers , the roads in the centre of London are pothole free !! Shame on you fraudulent government scum!!
Pothole dodger - 3-Oct-17 @ 7:45 PM
@Tex - yes, but rising car insurance has nothing to do with the roads, that's to do with people claiming whiplash everytime they have a slight bump. I very 'slightly' clipped the side of someone's car when I was reversing out of a car parking space, no damage apart from a 2 inch scratch. The owner happened to be in it at the time. She claimed for whiplash and the car being a write-off. Absolutely unbelievable, seriously. I really don't know how she got away with it. She was off work for weeks and then said she couldn't drive. She laid it on so thick. Too many potholes in the road that need repairing, but, you can get lower road tax or no road tax if you buy the right car. I will however agree with you on the price of food and fuel.
Mike - 29-Sep-17 @ 3:18 PM
So road tax pays for the up keep of roads... Council tax does that aswell though so shouldn't it be one or the other or combine the two and give us a tax break? It's getting harder and harder to live what with ever rising car insurance aswell as extortionate prices for energy , fuel and food. It's a disgrace, something needs done and all this reviewed. Now I'm not niave enough to think JC is the answer and no that's not Jesus Christ but the government needs to address this. lower council tax or road tax it's that simple.
Tex - 29-Sep-17 @ 7:54 AM
Its all a scam road tax we pay then theres the council tax ment to help pay for roads as well feull tax again so 3 taxes for same plus halp the road we lose to cyclists we get ript of oh and income tax pay for it' wheres robin hood we need him
Peter - 17-Aug-17 @ 1:15 AM
We all hate paying tax, and as a car driver I pay a double whammy both in road tax and tax on fuel.If we have to pay a road tax then it should be fair, and it should be applied to 'all' road users, that includes bikes. This discussion is about tax however now I'm on my soapbox as a car driver who has been on the receiving end twice of bad cyclist, both jumping red lights, I would also call for cyclists over 16 to have at least third party insurance, the same as all road users.Cyclists have no financial liability at all with regards road use, or damage caused by accidents.
Cyclist V Cars - 1-Aug-17 @ 2:28 PM
To Anna B, you say cyclists take up less room than cars.Well, we are now getting told that we should give cyclists as much room as we give to a car, which means they effectively take up the same room.In addition to that, cyclists are much slower than cars, which means they hold traffic up and cause them to slow down and speed up all the time, meaning more fuel is burnt thus more air pollution.Don't get me wrong, I think it's better if people can use bicycles (considerately) in some areas, but in others they are at best a nuisance and at worst dangerous.
Mark M - 20-May-17 @ 12:23 PM
To the cyclists who say road tax doesn't pay for the roads - well, maybe it doesn't directly, but of course it will filter through.Do you honestly think there would even be roads in most places if there were no car, lorry drivers etc on the road?Cyclists would have to get by using mucky tracks.
Mark M - 20-May-17 @ 12:13 PM
Bailiff for court turned up in a brand new 17 plate 40,000 grand car. Yeah right they need the money for stuff like that. It's robbery and one day when cars fly everywhere, there will be air tax. I was born to live and the planet is where I live. So what right does the government notorious for spending money on rubbish, have to demand tax. If I went to someone and said I would keep their driveway repaired for a £100 a month and yet didn't, and still demanded the money, I'd be done for fraud and other stuff. DVLA are robbing us year on and it's wrong. Politicians wages should be like any normal persons. This country is run by scoundrels.
Jbar - 2-May-17 @ 6:04 PM
OK. So what percent of the total cost of the building and maintenance of roads is paid for by petrol and road tax? And how much is not, and therefore iscovered by the other taxes and rates that we---including cyclists and pedestrians---pay?
micagem - 23-Apr-17 @ 10:04 PM
Road tax is a nonsense name as the roads we use are more like tracks . The state of the roads would suggest there's no money spent on them at all. I used to accepts that the minor roads would have the odd pothole but now it's like a dodge the hole game on the minor roads everywhere . The thing that worries me most is the cancer of potholes has now spread to the motorways where you would never have seen a pothole survive overnight if at all , now they are becoming more and more common and taking weeks if not months to be repaired , this us a seriously dangerous situation as a car travelling at 70 miles an hour should not be swerving to avoid a hole and if it hits the hole you don't know how many people could be killed if there's a blow out caused by the state of the road .
Ped - 6-Apr-17 @ 10:58 PM
@stuart - Vehicle tax collected fell £200m after paper discs were stopped (so there is no estimation currently) but prior to thatonly 28 per cent of tax collected was spent on roads in 2012. All taxes go into a central fund, so money made from motoring can be used on everything from healthcare to education - it depends on where it's needed. Plenty of money will be needed to spend on pot holes to fill in this year, judging by the BBC's report yesterday. Alex.
Alex - 29-Mar-17 @ 11:29 AM
I asked Google a question about how much road tax is collected overall and how much is spent on the roads - as usual no answer - can anyone ?
stuart - 28-Mar-17 @ 5:00 PM
Hey don't blame anyone other than those who hold the countries purse strings. It's their fault and only their fault! Taxation is the one thing that we all pay and don't get what we pay for!!!!! It's theft by any other name! We drivers ALL pay Road Tax and huge fuel tax yet out cars are being battered to death because we are not getting what we are paying for!!! It's criminal!
Joliemsa - 28-Mar-17 @ 7:05 AM
We are all paying a significant sum for vehicle excise duty but our road surfaces are in a very poor state indeed being well worn and/or potholed in much of the network. Other countries in Europe have superior road surfaces and I fail to understand why the vehicle excuse duty is NOT being used for the roads but instead to fund other areas not transport related.This is unacceptable and the funds should be used forthwith to repair and resurface roads to a reasonable standard.
Will - 8-Mar-17 @ 10:51 PM
totally agree with dratt - 24-Apr-16 @ 6:02 AM
Moo - 20-Feb-17 @ 11:02 PM
@Chis76 - you can't say that just because you don't drive you shouldn't pay tax for roads. I'm sure you use roads all the time, to cross, use public transport to travel on them, roads benefit us all. We'd be in a sorrier state without them.
Jim. - 17-Feb-17 @ 1:56 PM
Just reading about all this tax and what taxes pay for what. I thought income tax paid for Dwp and towards my statutory pension. But no it pays for roads and I don't even drive. Council tax pays towards roads and not all of it goes to council services. No wonder this country is in bad financial position because Mr money bags who is in charge of budgeting is making a right balls up.
Chis76 - 16-Feb-17 @ 7:20 PM
Anna B - Your Question:
Who pays for road accidents? Who pays for business and quality of life lost due to traffic jams? Who pays for the damage caused to our lungs by pollution? Those who complain about "cyclist" using the road, do you want me to get a car and take up more space and block your way? You could be grateful that either I don't have a car or if I do, I leave it home and use a gentler way of transport. It's not all about money. If you drive, you take away other people's peace, space, fresh air, safety, etc. Children can't play outside anymore. You can't put a price on that!

Our Response:
Many thanks for your interesting comments.
TheTaxGuide - 4-Aug-16 @ 3:05 PM
Who pays for road accidents? Who pays for business and quality of life lost due to traffic jams? Who pays for the damage caused to our lungs by pollution? Those who complain about "cyclist"using the road, do you want me to get a car and take up more space and block your way? You could be grateful that either I don't have a car or if I do, I leave it home and use a gentler way of transport. It's not all about money. If you drive, you take away other people's peace, space, fresh air, safety, etc. Children can't play outside anymore. You can't put a price on that!
Anna B - 4-Aug-16 @ 8:26 AM
Overall VED is a con in the same way that Global Warming is a con (I have never experienced anything cold to transfer heat to a warmer object!). If all our taxes are combined we pay in the region of 70% fro every £1 earned plus the hidden tax of inflation! which does not leave much for our subsistance. It annoys me beyond measure that I have had to hammer out 4 dented steel rims in the past year as a result of potholes and with all the money the treasury recieves it baffles me that they do not have a clue how to allocate effectively for UK infrastructure which is clearly intentional. A report in 2012 showed that government managed to waste £120 billion on rubbish like office furniture, flowers, redundant IT etc. If my car would not be impounded or otherwise forcefully taken from me or I wouldnt be fined or imprisoned I would not pay tax at all in any shape or form because it is all a con and only serves to maintain the status quo. I would gladly volunteer payment for local services that I use or might use though! We clearly do not live in a free society since non payment of such valueless extortion are met with a responce that can only be described as coercive. Big government or centralisation is a major contributor to why this does not work. Government is a bloated, inefficient, old school, boys club that seeks not only to rob you and squander all your tax money but also to beguile you into offering gratitude for their intentional gross ineptitude. I have no sympathy for fools who cannot see the wood for the trees.
dratt - 24-Apr-16 @ 6:02 AM
I have a problem with Vehicle Tax. I put 4 wheels on the road (that according to cyclists causes damage to the road surface they use but they don't pay anything- Well at least I'm paying ) and pay the upper end of the Tax bracket. 4 wheels from a small non taxable car can cause as much damage to the road as any other car .- The mileage is the issue.If Tax was put on petrol - If I do 3000 miles a year, why should my Tax be more than someone who does 30000 miles a year - they are the vehicles doing the mileage / damage ?Don't go on about the environment - it's a Government Tax which is easy to invoke.My car does not pull a big anchor behind that causes damage and so all cars should pay the same Tax. BBC Weather forecasters get paid £1000+ each year to tell us incorrect weather -Why should we believe them when they tell us weather next week that is wrong but 20 years times there will be no Polar bears ?
andy hayes - 31-Jan-15 @ 9:16 PM
All adult tax payers pay to maintain and build roads , that includes cyclists! Car owners and other vehicle users pay vehicle excise duty. car tax to put their vehicle on the road. With reference to previous comment it is obvious that cars cause damage to the roads!
realist - 15-Jul-13 @ 12:58 PM
There has been a noticeable decay in the standard of many roads over the past year or two, which will result in substantial injury, damage and cost to the public purse. The government has to inject more money into infrastructure, starting with road improvements, which will create jobs and boost the economy. Where will this extra money come from? Two places I would suggest.Tax on cyclists and driving license renewal fees.It is wrong to think that cyclists should be exempt as they cause no damage to the road. In reality, cars create a negligible effect on our roads also (roads are designed to withstand the forces from HGV's and thus the force from a car wheel has little or no impact) cyclists use and enjoy our roads like any other road user, during rush hour when they force cars into single lanes on dual carriageways, at night when they are barely visible until within 10-20 metres, etc etc therefore they should pay a contribution to the maintenance of the road network.Also by law motorists are required to update there license every ten years. It would be interesting to know how much unclaimed license fees exist at the moment. Perhaps if the police were made to enforce this law more closely and issue penalty tickets more readily, then the government would experience an influx in license update fees.
Daz - 26-Feb-13 @ 2:57 AM
So the new ford Eco boost is tax free ?, driving this car contributes to nothing really ! Dont get this ! Surely every car drivin on our roads should contribute in some way to our network system !!!!!
Ferris - 20-Jan-13 @ 6:00 PM
Vehicle tax - Road tax are the same thing! We pay tax for putting our vehicle on the roads and for the curtisy of using worn away, damaged, bodged and potholed disgracefull pieces of concrete called a road. It discusts me that money is sent to foreign countries while such maintainance as this around our country is left to ruins and not only damaging our vehicles but are health and safety hazzards for pedestrians on foot.
K - 12-Mar-12 @ 2:45 PM
I think its bad management by the goverment, Car tax should be spent on the road, rail fares should be spent on the railway, and tax on bankers should pay for the banks debt! Over the last 10 years they have double the road tax there twice the amount of cars on the road, yet the roads are crumbling under our feet!, I couldnt believe it when my mum showed me here car tax £210 for a polo 1.4L but if you drive one 12 years old its £130. How did they tax up before the excuse of global warning?
matt - 19-Feb-12 @ 3:24 PM
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