New research from Caxton, the travel money specialists, reveals how the coronavirus pandemic has changed the way people are managing their finances.

In a survey response from almost 16,000 cardholders, the key findings were as follows:

  • 39% of people say they are deliberately saving more.
  • 59% of those aged 18-25 say they are deliberately saving more, whilst for those in the 56-65 bracket the figure is less than half at just 26% whilst the percentage for over 65’s is only 19%.
  • Young people may be saving more, but 61% of 18-25’s still hope to travel abroad on holiday this year.
  • One in five 18-25’s said the crisis had made saving more difficult, compared with just 6% of those aged 65 or over.
  • However, in response to the question ‘have your finances been impacted by the pandemic’ only a fifth of 18-25’s said their finances hadn’t been affected, compared with 55% in the 56-65 age group and 70% for over 65’s
  • Older customers have not been affected as much financially but are the most nervous about going overseas on holiday – with only 1 in 3 hoping to travel abroad in 2020

 

Alana Parsons, Chief Operating Officer at Caxton FX commented on the findings: “It’s positive to see younger people making a conscious effort to save more, although the uncertainty of employment after the furlough scheme ends is no doubt a factor here.”

Despite the financial and economic disruption our customers are facing, there remains an eagerness to holiday overseas, with 52% of respondents still hoping to travel abroad this year”.

 

Finance experts TotallyMoney are advising people that if they need to make large purchases, they should do so with their credit card, to protect their finances during the coronavirus crisis.

  • Section 75 of the Consumer Credit Act makes both credit card lenders and retailers responsible for when a service or product between £100 and £30,000 isn’t delivered
  • Retailers such as Debenhams and Laura Ashley have gone into administration, causing doubt for shoppers, as well as the collapse of Thomas Cook and Flybe in the past year
  • Alarmingly, nearly a third (29%) don’t realise Section 75 covers them for credit card purchases
  • Over three in ten (34%) don’t know that PayPal transactions aren’t protected

With many retailers and services struggling due to coronavirus, customers are being warned to protect themselves if the company collapses or can’t deliver the service or product.

 

When you can use Section 75

If consumers bought an item and it doesn’t arrive due to the company filing for administration or failing to deliver, this can be refunded. For example, if someone bought a sofa on their credit card but it was never received, this is covered.

Even if customers only use their credit card for partial payment, they can still claim back a refund. That means if the sofa was £400 but an initial £50 payment was made on a card, a full refund is still available.

Faulty or damaged goods are also protected. If a mobile phone is bought online and it arrives with a cracked screen, Section 75 covers this too.

As well as goods, cancelled holidays and events are also protected by the act. Plus, any additional expenses that may have been booked for an event. For example, accommodation or train tickets to a festival.

 

Breaking the chain 

Any payment made on a credit card between £100 and £30,000 is covered under Section 75, providing the link between the customer, the credit card company, and the service provider hasn’t been broken.

This means that purchases made through third parties, such as PayPal or a travel agent, aren’t protected under Section 75.

However, using your credit card for a contactless payment, including on a digital wallet such as Apple Pay, doesn’t break the chain. In this situation, you’re still directly using the credit card to make the purchase. That means customers using contactless payment for part of a purchase over £100 are protected.

 

Alastair Douglas, CEO of finance experts TotallyMoney, comments:

It’s important to be aware of Section 75, not just for previous purchases made, but also to protect yourself in future.

“At the moment, many companies are struggling and unfortunately, some might not make it through this crisis. Customers should make sure they’re protected in the event this happens, by making large payments on a credit card.

“This allows people to rest assured they won’t be left out of pocket, especially at a time when many people are struggling to make ends meet.

“Before applying for any credit card, it’s important to check your eligibility. This shows you how likely you are to be accepted, so you can find and apply for a card you have a higher chance of being accepted for. This can also help to protect your credit score, and reduce the need to make multiple applications. 

“At TotallyMoney, we’re on a mission to improve the UK’s credit score and help people move on up to a better future. Section 75 is always a good way to protect your finances, but particularly right now, when many people can’t afford to lose out on money if something should go wrong.”

 

Section 75 Top 10 Tips

To protect your purchases, here’s all the information you need about Section 75.

1. Limits on claims

Individual items and purchases costing more than £100 and up to £30,000 are covered under Section 75. So, whether it’s a cancelled holiday, or piece of furniture that never arrived, it’ll be covered.

2. Pay a deposit, get full value cover

When a deposit for goods or services is required, use a credit card — even when the deposit is less than £100. Should anything prevent you from settling the balance (like the company goes bust or the seller vanishes), Section 75 lets you claim the full amount. Not just the paid deposit.

3. We’re talking credit, not debit

Section 75 doesn’t cover anything bought using a debit card. Chargeback protection is as good as you’ll get with debit.

4. They’re bust. You’re not broke

Buying from a company that goes bust before they deliver doesn’t mean your money’s lost. Section 75 requires credit card companies to get your money back.

5. Pay part credit and part cheque, get full value cover

The same goes if you decide to pay part of the balance by credit card and the rest by cheque. Consumers can reclaim the full value of the qualifying goods and services even if the total balance wasn’t paid using a credit card.

6. Stay protected on closed cards

Say you buy an item, close the credit card you bought it with, but something goes wrong with the qualifying goods or services, Section 75 means you can still make a claim.

7. Extra expense cover

If you book a holiday and the flight is cancelled, through Section 75 you could claim back additional accommodation and food expenses, providing those consequential losses were reasonable.

8. Section 75 loopholes

Buying through a third party (like online marketplaces or travel agents), additional cardholder purchases, or cash that’s withdrawn from your credit card account won’t offer Section 75 protection. You need to have paid the company directly (so purchases made through PayPal, for example, aren’t covered).

9. Section 75 applies to all credit cards

When it comes to Section 75 there’s not one rule for one credit card company and something different for another. All credit cards come with Section 75 benefits.

10. The claim process

First port of call: the retailer you bought the goods or services from. Failing that, go to the credit card company — this might be your bank or building society, not Visa, Mastercard or AMEX. They’ll get you to fill out a claim form and your money will be refunded.

Brits are planning to spend an average £195 each on the high street on life-after-lockdown treats – equating to £9.3 billionacross the UK – according to new research from American Express. Shoppers are hitting their local high street to treat themselves to meals and drinks out, along with some new items for their wardrobe.

The top treats people will be spending their money on are restaurant meals, new clothes, followed by drinks at the pub.

Top treats for adults shopping on the high street

  Treats Average money spent per high street shopper
1 A meal at a restaurant £31
2 New clothes / accessories £25
3 Drinks at a pub or bar £21
4 Home decorations or furniture £19
5 Electronics and gadgets £15
6 Coffee / refreshments at a café £13
7 Theatre £13
8 Beauty treatments or haircuts £12
9 Cosmetics / perfume £11
10 Cinema tickets £11
11 Books £10
12 Flowers £8
13 Dry cleaning £6

Brits hitting the high street in search of little luxuries can earn up to £50 in statement credits with the American Express Shop Small offer, which gives eligible Cardmembers a £5 statement credit when they spend £10 or more at participating small businesses. The offer requires enrolment and is valid once per participating small business location, up to 10 times, until 13 September 2020. Full details can be found here.

FOMO (fear of missing out)

Brits have experienced a case of FOMO during lockdown. Nearly half (49%) of UK adults said they longed to go out for professionally cooked meals and more than a third (36%) admitted to missing trips to the hairdresser and regular hair treatments. Lockdown locks became somewhat infamous during the past few months – with almost one in five  (19%) attempting their own haircuts at home.

Other sorely missed activities included drinks at the pub (33%), going to the cinema (24%) and browsing in bookshops (18%).

Getting ready to shop in-store

As a nation, our love for local has been stoked by the lockdown measures. Half of those who increased their online spending during lockdown plan to spend more on their local high street now that restrictions have eased.

Steph McGovern, journalist and television presenter, is backing the American Express Shop Small campaign. She said: “Lockdown gave us the opportunity to think about how we spend and what we buy. Now is a really good time to take stock of your spending habits and think about how you could spend more wisely by taking advantage of offers, discounts and benefits. And there’s no better way to show some love to our much missed independent retailers by popping into their store and seeing what’s new.”

American Express offers the following tips for shoppers looking to spend wisely when they return to shops

  1. Get to know your local shop assistants

Many local and independent shops are run by small teams, maybe even just the owner in some cases. When you get to know them you appreciate their service even more and they are more likely to tell you about new products, sales etc.

  1. Grab a bargain

To make your money go further, keep a look out for upcoming summer sales and discounts. Also remember to check for offers such as the American Express Shop Small promotion, where you can earn a £5 statement credit for spending at least £10 at a participating small business. Full details can be found here.

  1. Earn points every time you shop

If you are going out shopping, it’s best to put your spend on a Card that earns cashback, rewards or points for your purchases. This means every purchase can count towards something else – a treat for yourself or someone important in your life.

  1. Check online, check out at the till

Retailers have become much more inventive during lockdown, finding lots of new ways to communicate with their customers at home. Make sure you check in with the latest offers, and exclusives before you head in store so you know exactly what you want.

Almost a fifth (18%) of people aged 50 and over say that the COVID-19 pandemic has already or may impact their retirement plans, according to a new study from Co-op Insurance.

Of these, a quarter (25%) said they’ve not been able to retire due to their finances, a fifth have had to use some of their retirement savings after being out of work and a 10% have retired sooner than planned due to being made redundant during the pandemic.

Meanwhile, the study reveals that the pandemic has encouraged almost a third of people aged 50 and over yet to retire to do so sooner.

Of those people over the age of 50 who have retired, almost a quarter (23%) said the disease has affected their plans to spend time with friends and family and a fifth have not been able to travel as they’d planned.

When looking at how this impact on retirement plans has made people aged 50 and over feel, almost half (49%) have realised how important friends and family are, over two fifths (44%) say they feel annoyed and over a quarter think they need to make up for lost time.

Graham Ward Lush, Head of Life Insurance at the Co-op said: “It’s perhaps no surprise that so many people over the age of 50 are disappointed with how the pandemic has affected their retirement plans, with so many envisaging more of this time being spent with friends and family.

“It’s encouraging to hear though that despite this situation being frustrating and disappointing for so many, the majority of people are now planning to make up for lost time.”

Paragon Bank has urged savers to ensure they are making the most of tax-free savings as figures show that the number of ISA openings has halved this year.

According to data analysed by Paragon, British savers opened a total of 932,000 new ISAs between February and May 2019. During the same period in 2020, only 490,997 ISA applications were processed, a 47% decrease year-on-year.

This slump in ISA activity doesn’t stop at account openings, as the total growth of ISA account balances is down 32% on last year.

This is despite savers saving more money during lockdown, with a staggering £22.6 billion stashed into non-ISA easy access saving accounts between February and May 2020, an increase of £15.8 billion compared with the same period in 2019.

However, some product types are performing better than the market average and have seen success this year. While fixed rate and easy access ISA openings were down by 36% and 42% respectively, the take-up of notice ISAs has grown rapidly.

Certain financial providers, including Paragon Bank, are also bucking the trend and have seen a successful ISA season. Paragon Bank saw a 65% increase in ISA account openings between February and May 2020, compared to the same period in 2019, following the introduction of a range of new product features tailored towards supporting customers make the most of their ISA allowances.

This included the launch of the ISA Wallet, a feature that allows savers to spread their £20,000 annual ISA allowance across multiple Cash ISAs with Paragon. The provider also introduced the Flexible ISA feature, which allows savers to replace funds withdrawn from their ISAs without it impacting their tax-free entitlement.

Derek Sprawling, Savings Director at Paragon Bank, said: “We know that the current savings landscape is driving up levels of inertia, and there is less of an incentive for savers to look for the best deal and move their money around.

“Even in the current market, receiving tax-free interest on savings is invaluable now and in the future. We would urge savers to look at ways they can maximise the return on their ISA allowance.

“It’s also the responsibility of financial providers to support people by making sure ISAs are as straightforward and flexible as possible. Introducing features on accounts that will allow people to find a way round some of the traditional limitations on ISAs, for example the limit on account openings per tax year, is one of the ways providers can support their customers.”

  • Fewer than two fiths (39%) of adults living in rental accommodation have home contents cover compared to four out of five (83%) homeowners.
  • Renters value their home contents at around £30,000 on average.
  • Only one in five (20%) people aged under 25 have cover in place, whereas the vast majority of those aged 55+ have home contents insurance.

Sarah Applegate, from Aviva, said:

“Tenants sometimes make the mistake of thinking the items in their home aren’t worth much, so they may feel that they don’t really need contents insurance. But it’s very easy to underestimate the value of possessions. Taking into account the likes of laptops, tablets and TVs, alongside essentials such as clothes and home furnishings, the total value quickly adds up.

“Our research shows that  when renters consider their possessions individually, they value their home contents at around £30,000(3) on average. So skimping on contents insurance could be a very expensive mistake. If no cover is in place, people could face replacing their hard-earned goods themselves, should the unthinkable happen.  

“While no-one really wants to think about losing items through a burglary, fire or flood for example, the sad reality is that these things do happen. So whether they own their home or they’re renting,  we’d urge people to consider how they might protect their possessions.”

Aviva’s tips for renters when considering contents insurance:

  1. Work out the value of the belongings in your home – they may be worth more than you think. Go round each room and add things up, or use an online contents calculator so you can work out the replacement value of everything you need to cover.
  2. Don’t assume you are covered by your landlord’s policy. The landlord is usually responsible for insuring the building against damages, but not the contents that you keep in the property.
  3. Ask your landlord about installing a burglar alarm, extra locks or putting a gate across any open alleyways at the side of the house. This means both their building and your contents are more secure.
  4. If you have any valuables such as jewellery or expensive watches, check with your insurer if you need to list them separately on your policy. Many insurance policies will have a ‘single article limit’ on standard cover, which is the most the insurer will pay out for a single item, in the event of a claim. If you have valuable items worth more than this limit, speak to your insurer.
  5. Choose the cover which best fits your needs including any optional add-ons. Many insurers offer ‘accidental damage’ cover in case of spillages or breakages. This can be particularly handy if there are children in the home.
  6. Consider whether you want cover just at home, or when you’re out and about too. Extra personal belongings insurance can cover possessions – including pedal bikes, handbags and jewellery – away from the home, in the UK, or anywhere else in the world.
  7. Don’t duplicate your insurance. If you have taken out separate cover for your mobile phone, but you also have personal belongings insurance under your home contents cover, you could well be paying to insure the same item twice.

Ends

As lockdown measures continue to ease, new drivers in England can now start taking driving lessons and theory tests again (from 4th July) and practical tests from 22 July.

However, with only key workers able to take driving lessons and tests since 17 March and the DVLA only starting to take applications for provisional licences again since mid-June, GoCompare Car Insurance experts estimate there may be 370,000* new drivers held back by lockdown and now keen to get behind the wheel.

With a four-month backlog to tackle, booking lessons with one of the UK’s 40,000** professional instructors may be difficult, and some learner drivers may also be reluctant to share a car with someone outside of their usual ‘bubble’. If parents or friends are happy to become stand-in instructors, they will need to know the rules regarding teaching someone to drive to ensure both they and their student stay on the right side of the law and their insurers.

The rules of the road

  • The learner must be at least 17 years old and hold their own provisional driving licence
  • Supervising drivers must be aged 21 or over and have held a full driving licence for at least three years
  • The supervising driver and the learner must both be insured to drive the car
  • The vehicle must display L-plates front and rear, which can be removed when not being driven by a learner
  • If you are supervising a learner driver you are legally in charge of the vehicle but both of you can be penalised depending on the infringement. If the learner breaks the speed limit they may be fined and receive penalty points on their licence. However, if you are using your mobile phone whilst supervising a learner driver, you will be the one prosecuted.
  • You can’t take a learner driver on a motorway – only approved instructors in cars fitted with dual controls can do that
  • You can carry other passengers (though it’s best to avoid distractions)
  • You cannot be paid to give lessons unless you’re a qualified professional instructor

Being properly insured

Using your own car to teach a learner to drive

You can add a learner driver to your own insurance policy as a named driver. Your insurance premium may increase, and you may have to pay an administration fee of up to £62.00*** to amend the policy depending on your insurer.

Using the learner driver’s own car

If the learner driver has their own car they must be insured as the main driver. Arranging insurance in your or anyone else’s name as the main driver in order to keep the cost down is known in the industry as ‘fronting’ and is technically insurance fraud. Doing this will invalidate a policy and could lead to criminal charges and difficulty obtaining insurance in the future. If you are supervising a learner driver in their own car you must be added to their policy as a named driver. Adding an experienced driver with a good driving record to a learner’s insurance policy may help to lower their premium.

What is learner driver insurance?

Some insurers provide what’s known as learner driver insurance. This is a policy taken out in the learner driver’s name for their own car but with one or more additional named drivers who may supervise them whilst learning. The policy may run for a set period or until the learner passes their tests to gain a full driving licence. Depending on the type of policy chosen, the premium will either increase once the learner passes their test or the policy will end, and a new insurance policy must then be taken out to cover them as a qualified driver who is no longer being supervised.

The advantages of learner driver policies are that they are typically considerably cheaper than standard policies and benefit from lower excesses while the driver is learning.

For example:

Comprehensive cover for a 17-year old learner driver with a provisional licence living in Norfolk PE32 postcode driving a 2014 Citroen C3 Vti 82 1199cc, with two experienced named additional drivers:

  • Learner driver insurance – £290.01 pa and a total excess of £200.00
  • Standard insurance – £570.08 pa and a total excess of £600.00

In both cases premiums will increase when the driver gains their full driving licence. This is to reflect the added risk of being a newly qualified, unsupervised driver. Failure to inform the insurer when the policyholder passes their practical test and gains a full driving licence will invalidate the policy.

Insurers such as Collingwood, achoice and Sterling offer annual learner driver policies and can be found on GoCompare. Short-term learner driver insurance is also available. As always with car insurance, it is best to shop around to find the best deal for the insurance you need.

Experts at GoCompare have produced useful guides for new drivers and stand-in instructors with information on insurance and how to keep premiums down, a list of the best cars for new drivers and lots of other useful tips to help new drivers get on the road. You can read them here:

https://www.gocompare.com/motoring/guides/teaching-a-learner-to-drive/

https://www.gocompare.com/car-insurance/guide/the-cost-of-getting-on-the-road/

Lee Griffin, founder and CEO of GoCompare, commented, “We think there could be as many as 370,000 potential new drivers keen to start learning, many of whom could find it difficult to book lessons as instructors deal with the backlog.  In many cases, family and friends may well offer to step up to get them started. However, as well as having good driving skills and patience they also need to be aware of the rules for supervising new drivers and the insurance implications for both them and the learner. Failure to adhere to both could lead to fines for traffic violations or unknowingly invalidating their insurance, leaving them open to huge claims costs if they have an accident and even a criminal record for insurance fraud.

As lockdown restrictions continue to be relaxed and people can use their cars more freely, GoCompare Car Insurance is warning drivers to make sure their vehicles are safe to drive and in a roadworthy condition.

The warning comes as research, commissioned after MOT certificates were automatically extended due to the coronavirus pandemic, reveals that 9.3million cars require repair – many with potentially seriously dangerous faults.

The MOT extension which came into effect on March 30, was revised on 29 June.  Any cars due a test between 30 March and 31 July will receive an automatic six-month extension to their current certificate.  The extension does not apply to cars with an MOT expiry date on or after 1 August.   Motorists qualifying for the six-months extension are still required to keep their car in a road legal condition and can be prosecuted for not doing so.  

According to the latest official statistics3, 31.7% of cars fail their initial MOT, 9% failed with dangerous defects.

Worryingly, research commissioned by GoCompare Car Insurance suggests that 9.2m cars may not be roadworthy, some with dangerous faults.  The research found that:

  • 29% of motorists are driving cars which they know needs repairs.
  • 9% of drivers said that their car had tyres which need replacing.
  • 6% of vehicles have brake related problems.
  • 6% of cars need engine related or mechanical repairs.
  • 5% of cars require safety related repairs including seatbelts and lights.
  • 5% of cars need repairs to the windscreen.
  • 5% of cars have clutch problems.

It also revealed that 17% of motorists were driving a car displaying a warning or service light.

Driving a car with dangerous defects is a serious offence. It can pose a safety risk to the driver, their passengers, and other road users.  If you are caught driving a car with a serious defect you will be issued with a prohibition notice preventing you from driving the vehicle.  Depending on the circumstances, you could face a large fine, penalty points on your licence or prosecution.

Penalty points for driving a defective car stay on your licence for four years from the date of the offence. If you have a motoring conviction, insurers will see you as a greater risk and your insurance premiums will increase. You must declare unspent convictions to your insurer, otherwise you will invalidate your cover.

Lee Griffin, founder and CEO of GoCompare Car Insurance commented, “As the lockdown rules continue to be relaxed and people start to make more car journeys – its crucial to make sure your vehicle is safe to drive.

“The six-month extension of MOT certificates means that there are millions of cars on the road which haven’t been tested for over a year.  And it’s fair to say, that many will have faults that would usually be routinely identified during an MOT. We are concerned by the number of drivers who are knowingly driving cars which have outstanding repairs or faults.  These drivers are potentially risking their safety and that of others.”

Lee Griffin continued, “Drivers are responsible for their cars’ condition and they are expected to carry out regular safety checks to ensure that it is safe and roadworthy.  We are urging drivers not to ignore any dashboard warning lights and, if they have any concerns about the condition of their car to take it to be repaired.  Garages have been classified as essential businesses so are open for repairs, MOTs and routine servicing.”

For more information on how to keep your car MOT-ready: https://www.gocompare.com/motoring/guides/mot-checklist/

Following the latest easing of the lock down by the government, Caxton has started to see an uptick in new card applications and customer queries re foreign travel options, as more people start thinking about the possibility of a summer holiday abroad later this year.

On the back of increased customer questions regarding the best potential travel destinations, Caxton FX has responded by building a brand-new Travel Tracker, a handy online resource which provides consumers with the very latest key data on travel destinations across the globe.

The Travel Tracker gives would-be travellers essential information on 25+ countries, including the latest social distancing rules, expected quarantine period for arrivals and the current stance on foreign tourism.

This tool will help customers to decide if and where to travel to and is an innovative small step to help the travel industry start to get back on its feet after months of near shutdown.

Alana Parsons, Chief Operating Officer at Caxton FX comments: “We’ve been improving the availability of key travel information as we look for new ways to support our customers during this difficult period for the travel sector, and the wider economy.

Our new Travel Tracker is a handy one stop resource for our customers, giving them the very latest travel data, country by country, to enable them to shape their holiday plans for the months ahead.”

The DVLA recently announced an exemption for all vehicles whose MOT ran out after 30th March 2020 for a 6 month period to help the spread of Covid-19.

This has led to much conversation surrounding what exactly you should be paying for while lockdown is still enforced, with people questioning whether they still would need to pay their annual road tax to keep your car on the road.

So, we have made a comprehensive guide to help you understand car tax and how it’s affected by Covid-19.

What is car tax?

Simply explained, car tax is a payment each and every driver needs to make to both use and park on UK roads – even off-road.

The amount payable to the DVLA for your car tax will be determined by a number of factors (vehicle age, list price and CO2 emissions).

This is a payment, which is legally required for all UK drivers and their vehicles – you also need to tax your car even if there is no fee, or you are exempt.

Failing to tax your vehicle (unless SORN – we will get to this later) in all cases will result in an automatic £80 fine from the DVLA (Reduced by 50% if you pay within 28 days). A fee which could increase to £1000 following failure to pay the fine, and a clamp attached to your car.

If you choose to drive, despite not having tax, and are caught by the police (who use ANPR technology) you could be handed a fixed-penalty-notice of up to £1000.

Please do note that there have recent changes to how car tax is calculated.

What update is there for personal car tax whilst in ‘lockdown’?

Government guidelines have not changed surrounding car tax under the current lockdown measures – meaning drivers across the UK will be required to ensure they keep their car tax up-to-date to stay on the roads.

Many people will be questioning exactly why MOT’s are exempt, but not car tax. But the answer is simple – safety. In line with the Government advice, people should stay at home wherever possible; but the process involved in inspecting your vehicle to see whether it meets the exacting standards of the MOT test involves a number of people – all of whom have to work in close proximity with one another, who could potentially spread Covid-19 to you.

We presume it was a measure put in place to halt the spread of this potentially deadly virus, and protect our emergency services.

Check out our blog for more information about MOT extensions.

The typical taxing of your vehicle differs dramatically and remains very simple, and has very little human interaction – most of the process is automated and can be completed on their website or via post.

But do you need to pay car tax in every situation – what about if you haven’t used your car since lockdown has begun?

Will you need car tax if you choose not to drive your car?

Yes – each car which remains on the road must be taxed, even in spite of the recent Covid-19 outbreak, there are no exemptions granted for any driver. Some vehicles and drivers are exempt from paying for the road tax, but they still need to record the vehicle as being taxed.

Unfortunately, vehicle tax is not calculated on usage of your car, so whether you choose to drive every day or drive every so often, your car needs to have valid vehicle tax.

However, the option to voluntarily take your car off the road remains open for you; if you have a garage or personal driveway you may take out a ‘Statutory Off Road Notification’ (SORN) – we will come to this later.

Can you tax your car if your MOT is overdue?

Usually, it would be impossible to tax your car without a valid MOT certification – but since we are unable to get an MOT completed for 6 months, where does that leave drivers? Does this mean you are not able to drive for a considerable amount of time has passed?

No! Luckily, if your MOT has been extended you can still tax your car as you usually would. The only exemption would be if your car has been declared ‘off-the-road’ (SORN).

According to Government guidance ‘if your MOT was originally due in the same month as your vehicle tax and is being extended because of coronavirus (COVID-19), you cannot tax your vehicle until the extension has been applied. This is normally 3 days before your MOT is due to expire’.

How should you tax your car?

The process for taxing your vehicle remains the same, despite the outbreak of Covid-19 and can be completed via the DVLA. As mentioned earlier in this guide – the tax can be submitted via post or on the DVLA’s official website.

Click here to start your car tax registration, or renew your current tax.

But under what circumstances do you not have to pay the tax?

Are you able to delay payments?

With an uncertain financial future, you may be thinking of deferring your payment, but is this possible?

Unfortunately not.

To drive your car on UK roads, you will need to have taxed your vehicle by the expiry date – a letter is often sent to your residence with relevant details on. Alternatively, you can check your car tax expiry date online.

If you do not make this payment you could be fined and your car seized. But do not fret, the DVLA does offer the ability to spread payments, to help ease the financial burdens – you can opt-in for direct debits when you come to pay it.

But what are your options if you cannot afford your car tax?

What if you can’t afford car tax?

Unfortunately, if you cannot afford car tax, then you will be unable to keep your car on the road.

One option would be to inform the DVLA that you would like to start the process of completing a Statutory Off Road Notification (SORN) – a declaration that you no longer wish for your car to be on the road.

This does have some benefits, mainly in the refund you will receive for any full months of tax remaining on your car – but you will not, under any circumstances, be able to drive your car on the road until you tax your car once again.

It may be a viable option for some people, but please do note that leaving a car idle for a prolonged period of time can be damaging to the car itself. Also, some insurance providers may not cover you, so double-check your policy – otherwise, you could be paying a pretty penny if your car is stolen or damaged.

Therefore, we recommend weighing up the positives and negatives to understand whether this decision makes sense for your personal situation.

For more information on how to make a SORN and the laws around it, click here.

If you wish to drive your car in the future, then you will have to tax your car once again – or face a prosecution or a fine, which can be up to £2,500, if you decide to use it on the road for any other reason than travelling to a pre-booked MOT test.

While certain aspects of society have been paused during the current lockdown in the UK – much of it is still operating as normal, and this includes your road tax.

This guide should help you understand what you need to do to keep your vehicle on the road – even if you are using it a little less than you normally would be.

Having a valid road tax remains a legal requirement for every driver and their vehicle if they choose to keep it on UK roads (even parked on the kerb-side). Failing to do so may result in your car being seized and crushed – unless you choose to voluntarily take your car off the roads (SORN).

So make sure you understand the rules, and remember to drive safe.