Are DVLA Car Tax Rates Fair?

Car tax is amongst the most hotly disputed forms of taxation. Politically, car tax rates are an important topic; no one wants to spend more than they have to, particularly in today's strained financial environment, and there is therefore constant wrangling regarding the correct level of taxation for drivers.

This problem is compounded by the fact that many people rely on their car or other vehicle for their job. One need not think back very far to remember mass protests by hauliers angry about what they saw as punitive tax rates punishing them for doing their job. As can be seen, the question of fairness is a difficult one to answer with regard to any tax, but particularly car tax.

In the first instance, it should be remembered that car tax comes in several forms. Almost every car on the road today is liable for a standard rate of car tax, payable to the DVLA. However, taxes are levied on many other activities and items associated with driving (see our aticles What Does Road Tax Pay For? and Company Car Tax Liability and Rules on this site). The most obvious example of this (and amongst the most frequently argued over) is fuel duty.

Car Tax

The government wants car tax to reflect the fuel efficiency and CO2 emissions of the vehicle in question. So from March 2011, the amount of car tax you pay will depend on the emissions level of your car and the fuel you use. Fair enough, most would say. However, there is some discrepancy here as 'alternative fuel vehicles' (that is, those that do not rely solely on petrol or diesel) automatically qualify for lower tax rates, even if their vehicle has the same emissions level as the equivalent fossil fuel-powered car.

Fuel Duty

Once you have bought and taxed your car, you will also need to pay for fuel. When you buy petrol at the pump, only a very small proportion of the price actually pays for the fuel itself. There is a famous claim that a garage will make more money from a packet of crisps than they will from £5 of fuel, although whether or not this is actually true remains to be seen.

Regardless, you can expect around two thirds of your annual petrol or diesel bill to be attributable to tax. Again, the fairness of this is disputable. Should the government be making driving so expensive?

Parking Fees

Every time you park in a council-owned car park you are essentially paying a tax. You are purchasing a service, in the same way that your council tax pays for rubbish collection and other services. However, it is fairly indisputable that some councils operate their parking schemes in a less than fair manner. Examples include parking machines that do not give change, or which accept coins in inappropriate increments.

Sadly, there is very little we can do about car tax – if you need to drive, you need to pay it. That said, if you feel strongly that car tax is unfair there are several lobbying groups that pressure the government into reducing the rates.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Income Tax Calculator lets you enter your salary and get a clear breakdown of your income tax, National Insurance, and take-home pay for the 2025/26 tax year. See exactly where your money goes. Try it now →