Vehicle Excise and Registration Act 1994 section 4

Amount of duty

Section 4 sets out how vehicle excise duty is calculated depending on the licence period chosen and the method of payment.

• A 12-month vehicle licence is charged at the full annual rate, or at 105% of the annual rate if paid by instalments under a deferred payment agreement.
• A 6-month vehicle licence is charged at 55% of the annual rate (or 50% for vehicles subject to the HGV road user levy), or at 52.5% of the annual rate if paid by direct debit under a deferred payment agreement.
• Where a licence is taken out for a non-standard period set by order, the duty rate must be at least proportionate to the annual rate — for example, a 3-month or 4-month licence cannot exceed 10% of the annual rate per month.
• The power to create non-standard licence periods by order includes the power to amend or repeal the rules on 6-month licence rates.