UK Car Buying Glossary

A 20% sales tax in the UK. When buying a used car from a dealer, VAT is usually accounted for under the VAT margin scheme — charged only on the dealer's profit margin, not the full price, so it is not itemised on your invoice. VAT in full (plus any import duty) only becomes a separate cost if you import a vehicle from abroad and register it through DVLA's NOVA process.

The UK's mandatory annual roadworthiness test. A car needs its first MOT at 3 years old, then once every year after that. Tests are carried out at DVSA-approved test centres and garages. Driving without a valid MOT is an offence (with limited exceptions, such as driving to a pre-booked test). Check any car's MOT status and full history free at gov.uk/check-mot-history.

A car finance product where you pay a deposit, make monthly payments for a fixed term (typically 3–5 years), then choose to: pay a final balloon payment to own the car, return the car, or trade it in. PCP offers lower monthly payments than HP but you don't own the car until the final payment. Subject to mileage limits and condition requirements. Regulated by the FCA.

A car finance product where you pay a deposit followed by fixed monthly payments over a set period (typically 3–5 years). Once all payments are made, you own the car outright. Monthly payments are higher than PCP but there is no balloon payment at the end. The car is technically owned by the finance company until the final payment. Regulated by the FCA.

The trade body for the UK motor industry, covering manufacturers and traders. The SMMT publishes the registration and sales figures most widely cited for the UK market. When buying used, look for dealers signed up to consumer schemes such as the Motor Ombudsman or RMI/NFDA for added protection and a dispute-resolution route.

A paid vehicle history check (from providers such as HPI, the AA, or RAC) that reveals: previous owners, mileage history, outstanding finance, insurance write-off status, stolen-vehicle markers, and plate changes. Always recommended before buying a used car. Separately, you can check MOT history free at gov.uk/check-mot-history and tax/SORN status at gov.uk.

The official DVLA document — commonly called the logbook — proving a vehicle is registered and showing the registered keeper, vehicle details, and registration number. When buying a used car, ensure the V5C is present, the seller's name and address match, and the document serial number is not on DVLA's list of stolen/lost logbooks.

A tax applied when an employer provides an employee with a company car for personal use. In the UK, BIK is calculated from the car's P11D value and its CO2-based tax band, then taxed at your income tax rate. Fully electric company cars currently attract very low BIK rates, making them popular as salary-sacrifice choices.

The annual tax payable to drive or keep a car on UK public roads, paid to the DVLA at gov.uk/vehicle-tax. For cars registered since April 2017, there is a first-year rate based on CO2 emissions followed by a flat standard rate (with a surcharge for cars over a list-price threshold for the first few years). Zero-emission cars pay a low or zero first-year rate. If you are not using the car on the road, you must declare it SORN. Driving without valid road tax is an offence.

A declaration to the DVLA that a vehicle is being kept off public roads and is therefore not taxed or required to be insured. You must register a SORN at gov.uk if a car is not in use. The SORN ends automatically when the vehicle is taxed again.

A car's CO2 output, measured in grams per kilometre (g/km), determines its first-year road tax (VED) rate and its company-car BIK band in the UK. Lower CO2 means lower first-year tax; zero-emission electric cars sit at the bottom of the scale. CO2 figures are shown on the V5C and in the manufacturer's specification.

The UK government's Plug-in Car Grant for buyers ended in 2022, so there is no longer an upfront purchase grant for most new cars. EVs still benefit from low or zero first-year road tax (VED), very low company-car BIK rates, and grants towards home and workplace chargepoints via schemes administered by the Office for Zero Emission Vehicles (OZEV). Check gov.uk for current chargepoint grant eligibility.

When an insurer writes a car off after damage, it is assigned a category: Cat A (scrap only, nothing salvageable), Cat B (body shell crushed, some parts salvageable), Cat S (structurally damaged but repairable), or Cat N (non-structural damage, repairable). Always check write-off status via an HPI, AA, or RAC history check before buying.

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