The history of Road Tax

Sam Bisby

By: Sam Bisby

Commonly known as "road tax", the Vehicle Excise Duty (VED) is a thorn in every driver’s side. The road tax raised £5.63bn in 2009. The road tax paper disc was abolished on October 1 and instead is turning completely digital. This is the interesting history of the road tax and its matching disc.

Introduction

Although there were unofficial taxes on roads and bridges from medieval times, the first official vehicular taxation was the Locomotive Act in 1861. By 1889, all of the vehicles in Great Britain were required to pay an annual tax or licence.

Motor Car Act

The Motor Car Act of 1903 was the first legislation referring to motor cars, which specified that drivers had to register annually at the county offices paying a fee of £1 for a car or 5 shillings for a motorcycle.

Road Fund

The 1909/1910 Finance Act created the Road Fund administered by a Road Board. Based on a horsepower rating, this controversial tax was partially used to build or maintain the British road network, even though David Lloyd George originally stated the tax would only be used for the roads. There was £0.6 million raised through the Road Fund in 1910. 

First tax disc

The Road Traffic Act of 1919 and 1920 introduced the first tax disc. The tax disc was proof of payment for the Road Fund Licence. The original tax disc, which was to be displayed in a circular tax disc holder, was black and white printed on thick paper. The Ministry of Transport replaced the Road Board in 1919, which increased the vehicle duty. The road tax cost £1 per horsepower from 1921. 

Colour tax disc

The first coloured tax disc was introduced from 1923. The tax discs all expired on the last day in December. The tax disc changed colour every year to make it easier for enforcers identity outdated discs.

Perforated tax disc and funding changes

Perforated tax discs were introduced in 1938 and finished in 1942 and re-emerged in 1952, making it easier for the disc to fit in the holder. There are rumours that the machines used to make the perforated discs were damaged during World War II resulting in the break. The tax disc background text changed from road fund licence to mechanically propelled vehicle licence in 1939. From 1936, the car tax was no longer ring-fenced and instead used as a general taxation. The horsepower rating was replaced by the flat rate vehicle excise duty charge in 1948. 

Modern design

A new tax disc design was introduced in 1961. The new design consisted of vignettes and tonal colours. In 1977, the digital style tax discs were created. These digital style tax disc designs had a toned colour and a large print expiry date. The first wavy line design was used in 1977. 

Change to rating, water marked paper and online service

In 2001, the Government introduced taxation rates based on the CO2 emissions and the car’s capacity. The tax discs are now printed on water-marked paper. In order to make it harder for forgers, the tax discs have also featured perforated shapes, bar codes and holograms. An online car tax service was introduced in 2004. This made it easier for drivers to pay for their road tax. 

Tax disc abolished

From October 1 2014, the tax disc will be abolished. Drivers will no longer be required to display the tax disc in a holder on their windscreen, but it will still be mandatory to pay for their road tax annually, monthly or quarterly.