Abolished paper tax discs costing £107 million a year

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Abolished paper tax discs costing £107 million a year

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Author Mark Fairlie

Recent estimates from the Department for Travel have stated that, since the paper tax disc was scrapped in 2014, the Treasury could be losing as much as £107 million each year in unpaid car tax.

First introduced back in 1921, paper tax discs were scrapped in favour of a more modern, streamlined online system three years ago. The switch cost £1 million but was thought to save the government £10 million each year in administration fees.

Tax evader numbers have trebled

Since then the number of evaders has trebled, and it has been suggested that over 755,000 vehicles in the UK are being driven with no tax.

Of those vehicles, just over half had only been unlicensed for less than 2 months. 11%, some 83,000 cars, had been driving around with no tax for over a year. The DVLA has said they have seen a 166% rise in the clamping of vehicles for failure to pay vehicle duty in the last three years since the changes took place.

Department for Travel figures shows that untaxed cars, motorcycles and vans made up a substantial 1.8% of vehicles in 2017. Up from 0.6% before the tax discs were abolished, this is the highest figure in a decade. In fact, within the first full year of the online system, owners failing to tax their cars rose 0.8%.

Paper tax disc abolishment ‘evidently failed’

Nicholas Lyes, the public affairs manager for automotive services company RAC, has said that the idea behind abolishing the paper tax disc system was “to introduce greater efficiencies,” but has, “so far, evidently failed.” Many are now worrying that, without the revenue from vehicle taxes, road improvement projects will lack essential funding.

Director of motoring research charity, The RAC Foundation, Steve Gooding stated that whilst “no one likes forking out for taxes, at least the proceeds of this one will be spent benefiting those who pay it.” From 2020, Vehicle Excise Duty receipts will be used to directly fund improvements to the UK’s strategic road network, making evasion even more of a problem for the government.

Gooding also noted that the new, convenient online systems were a far cry from the days of printed paper and post office queues, but encouraging motorists to contribute their share was harder than anticipated.

“Arguably more drivers are now prepared to try their luck and see if they can get away with not paying any vehicle tax at all, or are simply forgetting to tax their vehicle when they are due to,”

Mr Lyles stated. Despite the government sending renewal reminders to vehicle owners, it seems not remembering to pay vehicle tax is a common excuse among evaders.

Abolished paper tax discs costing £107 million a year

3 million drivers kept old paper tax discs as a reminder to pay

A survey by AA last month found that roughly 3 million drivers have kept their old, obsolete paper tax discs displayed in their vehicles as a reminder to pay. Both the Department for Travel and the RAC agreed that the old tax discs worked as an effective “visual reminder” to prompt drivers into renewing their tax.

Another common problem the Treasury has with collecting tax is that not all motorists know when, what and how much they are liable to pay. For example, if you sell your car, the tax is no longer carried over to the buyer.

You’ll have to claim back the remaining unused tax, from the beginning of a new month, and the new owner will have to pay the VED before even driving their new car. This means both of you could be taxed for up to a month, which is estimated to make the government £40 million a year.

You’ll have to let the DVLA know if you’ve sold a vehicle, and the same rules apply if you were to give your car to a family member rather than sell it.

Lyles continued to say that

“more must be done to educate drivers about how and when to tax their vehicle, coupled with stronger enforcement to genuinely make drivers who evade vehicle tax feel that they are going to get caught.”

Highest evasions rates in North East and West Midlands

Research has found that the North East and West Midlands had the highest rates of evasion in the UK, with over 2% of drivers not paying for tax. The East of England showed the lowest rates at 0.8%.

The Department for Travel has said that the “vast majority” of motorists do actually tax their vehicles correctly, and the changes to the system have made paying car tax easier online. They concluded that as the DVLA’s current campaign stresses,

“driving a vehicle without taxing is breaking the law and the DVLA will continue to crack down on drivers who do.”

By | 2018-05-30T09:55:38+00:00 November 23rd, 2017|Economy, Personal Finance|0 Comments

About the Author:

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Journalist, Mark Farlie, provides cutting edge articles with a focus on plain English & zero jargon. With a breadth of interests, Mark writes on topics such as; personal finance, commercial finance, B2B, marketing, law and technology.

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