Can I Pay Monthly for Car Tax? Costs, Setup, and Direct Debit

Yes, you can pay monthly for car tax in the UK, but only by setting up a Direct Debit with the DVLA. Monthly instalments carry a 5% surcharge on the annual rate, which adds £10 a year at the current standard rate of £200. Debit and credit cards are only accepted for single annual or six-month payments.

How the Monthly Option Works

When you tax your vehicle on GOV.UK, you can choose to pay annually, every six months, or every month. The monthly choice is available only through Direct Debit, so the DVLA pulls the payment from your bank account each month automatically.¹

Once the Direct Debit is running, it renews on its own each year as long as you are still the registered keeper and the vehicle has valid MOT and insurance.² You do not need to log in and retax the car each year. That automatic renewal is often the strongest reason to use Direct Debit even if you could afford the lump sum.

The first payment can take up to 10 working days to leave your account, but you can drive the vehicle straight away. There is no need to wait for money to clear.³

What Monthly Payments Actually Cost

Paying monthly, or every six months, by Direct Debit adds a 5% surcharge to the annual rate. For most cars registered on or after 1 April 2017, the standard annual rate from April 2026 is £200.⁴ At that rate, the four ways to pay work out as follows:

Annual single payment: £200 with no surcharge, by card or Direct Debit.
Twelve monthly instalments by Direct Debit: £210 in total, or £17.50 a month.
Six-month single payment by card: £110, which carries a 10% surcharge.
Six-month payment by Direct Debit: £105, on the lower 5% surcharge.

The extra £10 a year for monthly payments is less than £1 a month, which many people find a fair price for smoother budgeting. If you would rather pay every six months, using Direct Debit saves £5 over a card payment because the surcharge drops from 10% to 5%.⁴

If your car had a list price above £40,000 when first registered (£50,000 for electric and zero-emission vehicles registered from April 2025), an extra £440 a year applies for five years starting from the second year of tax.⁵ That takes the annual bill to £640, or £672 across 12 monthly instalments.⁴

Electric and zero-emission cars registered on or after 1 April 2025 pay £10 for the first year and then the £200 standard rate. Electric cars registered between April 2017 and March 2025 also now pay the £200 standard rate.⁵ Monthly Direct Debit is available for electric vehicles on the same terms as for petrol and diesel.

What You Need to Set It Up

The whole process happens on GOV.UK. To start, you need a reference number from one of these:¹

The 16-digit number on your V11 tax reminder letter from the DVLA.
The 11-digit number on your V5C registration certificate (logbook), if you have no V11 or have lost it. The logbook must be in your name.⁶
The green new keeper slip from the logbook, if you have just bought the vehicle.

You also need the account holder’s name, sort code, and account number for the bank or building society paying the Direct Debit. Have those ready before you start, as the system validates them before it confirms.

If a Monthly Payment Fails

This is the part that catches people out. If your bank rejects a payment, usually for insufficient funds, the DVLA emails you and tries again within four working days. If that second attempt also fails, the Direct Debit is cancelled permanently and your vehicle becomes untaxed immediately.⁷

From that point, driving the vehicle is illegal until you set up a new tax arrangement. You also face an £80 late licensing penalty, reduced to £40 if paid within 33 days, and the DVLA can clamp the vehicle or pass unpaid amounts to a debt collection agency.⁷ Keep enough in the account to cover each monthly payment.

Changing or Stopping the Direct Debit

Switching Bank or Payment Frequency

If you move banks using the Current Account Switch Service, your Direct Debits transfer automatically and there is nothing to tell the DVLA. Otherwise, contact the DVLA with the new account number, sort code, and bank address at least five working days before your next payment. Any later than that and the old account may still be charged.⁸

You can change how often you pay when your current tax period is due for renewal, picking a new frequency at that point.⁹ To move from Direct Debit to card payment, ask your bank to cancel the Direct Debit, then retax the vehicle on the first day of the month when your next payment would have been due.

Selling the Car

Vehicle tax does not transfer to a new owner. Once you tell the DVLA you have sold the car, your Direct Debit is cancelled automatically and you get a refund cheque for any full months of remaining tax.¹⁰ The refund runs from the date the DVLA receives your notification, so tell them promptly.

Refunds do not include the 5% Direct Debit surcharge or any credit card fees you paid. That money is not returned.¹⁰ If you cancel just before a monthly payment is due, the DVLA may still take it, but that final payment comes back automatically within 10 working days.¹¹

Taking the Car Off the Road

If you want to stop paying tax without selling the vehicle, you can make a Statutory Off Road Notification (SORN). The vehicle must then stay off public roads entirely, kept on a driveway, in a garage, or on private land. A SORN stays in place until you tax the vehicle again, sell it, export it, or scrap it, so there is no yearly renewal.¹²

1
GOV.UK. Tax Your Vehicle
2
Driver and Vehicle Licensing Agency. 5 Myth-Busting Facts About Taxing Your Vehicle
3
GOV.UK. Vehicle Tax Direct Debit Payments
4
GOV.UK. V149 – Rates of Vehicle Tax April 2026
5
GOV.UK. Vehicle Tax for Electric, Zero and Low Emission Vehicles
6
GOV.UK. Tax Your Vehicle Without a Vehicle Tax Reminder
7
GOV.UK. Vehicle Tax Direct Debit Payments – If a Direct Debit Payment Fails
8
GOV.UK. Vehicle Tax Direct Debit Payments – Change Bank Account or Payment Method
9
GOV.UK. Vehicle Tax Direct Debit Payments – Change How Often You Pay
10
GOV.UK. Cancel Your Vehicle Tax and Get a Refund
11
GOV.UK. Vehicle Tax Direct Debit Payments – Cancel a Direct Debit
12
GOV.UK. When You Need to Make a SORN