posted 5 months ago

UK Road Tax Income Falls With Demise Of Tax Disc

Number of untaxed vehicles on the road rises since new road tax rules introduced – and confusion is a possible cause.

Government road tax income revealed

Government income from Vehicle Excise Duty fell hundreds of millions of pounds in the months following the abolition of the paper tax disc, The Financial Times reported. From October 2014 – the moment rules changed – to March 2015 income totalled £2.7 billion. That was £223 million less than October 2013 - March 2014.

In November 2015, Department for Transport roadside surveys suggested 1.5% of vehicles were untaxed which was a rise of 0.9% compared to 2013. The Department said this was “probably due to major changes to the vehicle licensing system, which took place in October 2014”. Confusion might explain this rise in non-compliance. 

Tax disc abolition coincided with new rules for buying and selling vehicles. The Excise Duty can no longer be transferred, for example. Sellers automatically receive a refund for any remaining months, so buyers must pay their own tax before taking to the road.

AA Spokesperson, Luke Bosdet, added: “Motorists were often caught out after changing address or not updating who is the registered keeper of a vehicle; meaning they missed any reminders from the DVLA. He continued: It is “not surprising” tax revenue fell, and “many” drivers are still not familiar with the new road tax system.

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Why tax disc was abolished

The Government abolished the tax disc to cut the cost of design, print, distribution and admin. However, the rise in the number of motorists not paying suggests it might take some time to break even. It claimed cutting red tape could also save businesses money.

Furthermore, the purpose of the disc was to prove to (say) police officers that vehicles were taxed. It was a receipt, in other words. But automatic number plate recognition cameras now scan traffic at countless locations in the UK. The system then confirms they are taxed and, if not, keepers automatically receive the fine.

Vast majority of vehicles in UK taxed

Driver & Vehicle Licensing Agency Chief Executive, Oliver Morley, explained: “Almost 99% of all vehicles on the road are correctly taxed: that’s around £6 billion in vehicle tax passed to the Treasury every year.” 

“We write to every registered keeper in the UK to remind them when their tax is due.” And, he added, we “have introduced a range of measures to make vehicle tax easy to pay, such as direct debit or online.” Drivers can split the cost by paying monthly, for example. 

Mr Morley continued: “At the same time, we are taking action against those who are determined to break the law.”