What Does Road Tax Pay For In The UK?
“Isn’t this what I pay road tax for?!” you think as you dodge that pothole on your street for the thousandth time.
The answer? Unfortunately not.
In the UK, road tax (officially known as Vehicle Excise Duty (VED) isn’t in fact used for road maintenance, not exactly anyway.
Instead, it’s pooled into the government’s central funds and distributed across various sectors.
Understanding Road Tax in the UK
Despite its common name, road tax isn’t a direct fee for road upkeep.
This annual tax is legally required, and failing to pay can result in hefty fines or even the impoundment of your vehicle. Factors influencing the amount of VED include:
Vehicle registration date - Older cars may follow different tax bands.
Engine capacity - Larger engines generally mean higher taxes.
Vehicle type - Motorcycles, commercial vehicles, and standard cars have different VED structures.
Where Does Road Tax Revenue Go?
So, if VED isn’t specifically for road maintenance, where does all that money end up? The answer lies in the Exchequer, the central government’s main fund. From there, the revenue is allocated to different departments based on national priorities, including transport, infrastructure, and public services.
The Exchequer is the government's central fund, money is used to fund a variety of initiatives.
The Department for Transport funds major infrastructure projects across the UK.
Local Councils are responsible for local road maintenance and development.
The Office for Budget Responsibility estimates that £9.4 billion will be raised by VED by 2027/28, up from the £7.3 billion collected for the 2022-23 tax year, or £5.8 billion in the year prior to the VED car tax changes in 2017.
Funding Road Maintenance & Infrastructure
Whilst your road tax isn’t directly tied to fixing potholes, a portion of government spending still supports road infrastructure. The Department for Transport and local councils allocate budgets for projects such as:
- Smart motorways
- New road layouts
- Road resurfacing
- New car parks
- Bridge maintenance
- Traffic management systems
How Road Tax Supports Public Transport
VED also contributes to keeping public transport systems running smoothly. A portion of the funds supports:
- Bus services
- Rail network improvements
- Public transport hubs
- Subsidies for rural transport
- Accessibility projects
This funding helps improve the reliability and reach of public transport, benefiting those who rely on it daily.
Whilst many assume road tax is exclusively for fixing roads, its impact stretches much further. The funds help maintain infrastructure, improve public transport, support green initiatives, and enhance overall road safety.
So, the next time you grumble about that pothole, remember your road tax is doing much more than just patching up the street.