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Taxing a Leased Vehicle

At Alphalease, we are often asked questions about road tax. Many of our customers get confused about who is responsible for taxing the leased car and whether the costs are included in the monthly payments. To help you understand, we have put together this guide to explain the process of taxing your leased vehicle.

What is road tax and what does it pay for?

Vehicle Excise duty, also known as vehicle tax, car tax or road tax, is a periodic tax that is levied as an excise duty. In the UK, it is a legal requirement to pay Vehicle Excise Duty (VED) on a motor vehicle which is to be used or parked on public roads. Vehicles that are not kept on public roads must be the subject of a Statutory Off-Road Notification (SORN) if they are not licenced. Vehicle tax rates are currently based on CO2 emissions although in the past, ratings have been based on engine size. Car tax rates are based on thirteen car tax bands (A to M) with each band being defined by a range of tailpipe CO2 emissions as measured on the official test.

Rates vary from £0 per year for low emission vehicles in Band A to £515 per year for vehicles with CO2 emissions of over 255 g/km for vehicles in Band M.

Is road tax included with a lease agreement?

All lease agreements arranged by Alphalease include road tax either for the full term or first year only. The amount of time the tax is covered depends on the type of contract taken. For Business Contract Hire or Personal Contract Hire agreements, the funder will provide vehicle tax for the duration of the agreement as they will remain the registered owner of the vehicle. If the vehicle tax cost increases during the term of the agreement, or any extended term, the customer will become liable to pay the amount of the increase. For finance lease agreements, the funder will only usually provide tax for 12 months.

Who is responsible for taxing a leased vehicle?

In order to tax a vehicle, the registered owner or keeper must have the VED reminder letter (V11) or registration certificate/logbook (V5C). For contract hire or personal contract hire agreements, as the finance provider is the registered owner and keeper of the vehicle, they are responsible for providing the vehicle tax for the duration of the agreement. It is worth knowing that from October 2014, paper tax discs are no longer being issued as license details are now stored centrally on a database. Vehicles still need to be taxed but physical tax discs will no longer be sent out by funders.

How do I check if my leased vehicle is taxed?

If you have a Business Contract Hire or Personal Contract Hire agreement and want to check the tax on your vehicle, you can check it has up to date vehicle tax by visiting the DVLA website.

To do this you will need:

• The registration number of the vehicle
• The make of the vehicle

If, for any reason, your vehicle tax is out-of-date, it is important that you call your finance provider ASAP to report the issue. This is incredibly important as if your vehicle is untaxed, it can be wheel clamped or instantly impounded.

If you have any more questions, feel free to give us a call on 01942 231123 and we will be happy to help!

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Alpha Lease are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 653004

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Registered Office : Park Lane Garage, Warrington Road, Goose Green, Wigan, WN3 6XB

Disclaimer: All vehicle images and descriptions are for illustration and reference purposes only, all vehicle leases are subject to credit approval and subject to change at any time. E&OE.

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