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The vehicle licence (tax disc) explained
Any vehicle used or kept on a public road in the United Kingdom is required, by law, to display a valid vehicle tax disc. A tax disc (also referred to as a vehicle licence or car tax) shows that you have paid the necessary vehicle tax (or vehicle excise duty) for your vehicle.

The purpose of vehicle tax
The tax disc is the first indicator to the police that the vehicle:

* has the necessary test certificate (MOT)
* is covered by third party insurance
* vehicle tax has been paid

It also gives the Driver and Vehicle Licensing Agency (DVLA) the opportunity to check that the details shown on the vehicle register are up to date and accurate when the vehicle is re-taxed.