Are you aware that in just two weeks, at the beginning of October, the paper tax disc that we currently have to display on our car windscreen will no longer have to be displayed? Also, did you know that from the same date it will no longer be possible to transfer the residual tax to the new owner when a car is sold?
The tax or Vehicle Excise Duty (VED) payment is currently paid and evidenced on your car through the display of a paper tax disc in the windscreen. However, from October 1, drivers must tax their vehicles electronically, either online or at a Post Office and paper tax discs will no longer be used.
Drivers with time left on their paper tax discs will have their details uploaded automatically.
Automatic number plate recognition cameras will catch motorists trying to evade payment. Those who fail to comply will face a £1,000 fine.
What happens when you sell or buy a car?
From October 1 if you buy a used car, the vehicle tax will no longer be transferred with the car. This means you will no longer benefit if there are months left on the tax disc and you will have to renew the tax disc straight away, or risk being caught out on the road in an untaxed car.
The seller of the vehicle is responsible for informing the DVLA of a change of ownership via a v5C form. Failing to make this notification could result in a £1,000 fine.
Vehicle sellers will get an automatic refund for any full calendar months left on the vehicle tax.
Will this change result in a rise in the number of untaxed cars?
According to RAC research, over 60% of motorists surveyed do fear that scrapping the paper tax disc will result in a rise in the number of untaxed cars on the roads. What’s more, a further 44% believe it will actually encourage people to break the law.
Motorists’ fears about the number of unlicensed vehicles rising are likely to be raised by the estimate from the Motor Insurers’ Bureau, of around one million uninsured drivers on the road.
As there is no visible way of telling if a vehicle is insured, motorists will inevitably liken this to the situation that will exist after removal of the requirement to display a highly visible paper tax disc.
RAC chief engineer David Bizley said: “For the vast majority of law-abiding motorists the new rules will make very little difference, and in fact the option to pay by monthly Direct Debit from November will make it easier for many to budget for the payments.
“But there is clearly concern among those motorists that we surveyed over the issue of enforcement. Most of the changes make sense and will benefit the motorist, but too many motorists are unaware of the detail and the big question has to be whether enforcement using only cameras and automatic number plate recognition will be sufficiently effective.
“Although there is a network of fixed Automatic Number Plate Recognition (ANPR) cameras in urban areas and on motorways and trunk roads, there are inevitably fewer in rural areas. And, whilst police officers have the ability to identify untaxed vehicles, they don’t have the capacity to take on an additional workload.
“There are clearly many people who still believe that the humble tax disc is a simple yet highly effective way of ensuring all motorists pay their VED. As a result, there is real concern that without the need to display a disc, less scrupulous motorists will take a chance and try to evade payment. This already happens with insurance and adds an average of £33 to the premiums of the law-abiding majority who pay their insurance.
“If a similar number of drivers avoided paying car tax, we could be looking at around £167m of lost revenues to the Treasury, far exceeding the £10m that will be saved by no longer having to print tax discs and post them to vehicle owners.
“Motorists will therefore be looking to the DVLA for reassurance that the new rules will not give rise to a new generation of car tax-dodgers.”
In response, the DVLA has said: “There is absolutely no basis to these figures and it is nonsense to suggest that getting rid of the tax disc will lead to an increase in vehicle tax evasion. We have a proven track record in making vehicle tax easy to pay but hard to avoid, with over 99% of all vehicles taxed.”
Oliver Morley, chief executive of the DVLA, argued that there was no requirement for a TV licence to be displayed in a window at home, but the system was still policed, so the same theory would hold for car tax.
Diane Ray, MoneyHighStreet.com comments: “Change is invariably emotive as people tend to feel that why, if something has worked for a number of years should it be changed?
‘Clearly as technology moves on and can take out a lot of administrative costs from a process it makes sense to take advantage wherever possible. I therefore can see the value of moving to paperless car tax option. Time will tell how big a saving can be made and how much is lost or indeed spent on those who try to evade the tax.
‘My bigger concern is the whole issue of ‘Big Brother’ watching your every move – is this really what we want? How accurate it seems we are proving that the George Orwell novel 1984 was.”
What about car insurance?
As well your car tax, remember you now need car insurance whether you’re out driving your car on the roads, and even if you’re not driving it.
If you don’t have the insurance you could inadvertently be breaking the law.
Changes to requirements were made in June 2011 to help tackle the number of uninsured drivers when the Continuous Insurance Enforcement (CIE) was introduced.
Whether deliberately or otherwise, it really isn’t worth being uninsured.
Consider too whether you need to buy GAP Insurance. It may sound just like another cost but depending on the age and value of your car this may be a policy you could benefit from having. It basically protects you if you write off your car and your car insurance policy doesn’t pay enough to settle any outstanding loans on it or the cost of replacing it.