Car tax - are you aware of the changes?

POSTED: 15th October 2014
IN: Personal News

The UK car tax system is undergoing a significant change this autumn, so it is important for all motorists to be aware of the new arrangements and to ensure they remain in compliance with tax regulations.

The UK car tax system is undergoing a significant change this autumn, so it is important for all motorists to be aware of the new arrangements and to ensure they remain in compliance with tax regulations. undefined

So what exactly are the changes, and how will they affect you?

Paper tax discs are no more

From October 1st 2014, vehicles in Britain and Northern Ireland no longer need to display a tax disc in their windscreen. The paper document is being replaced by an electronic record, meaning discs that still have months to run after October can be removed and thrown away.

It remains a legal requirement for all vehicles to be taxed and the Driver and Vehicle Licensing Agency (DVLA) will continue to send renewal reminders when your tax is due to expire. You can renew over the phone, online or in a Post Office branch.

One upshot of the change is that it will not be possible to transfer tax with a vehicle that is being sold. The buyer will need to get new tax before they can use the car.

Sellers can notify the DVLA to get a refund for any full remaining months left on the vehicle tax.

Another significant development is that drivers taxing their vehicle from November 1st 2014 will be able to pay by direct debit. Payments can be made annually, every six months or on a monthly basis, with tax being automatically renewed and debits continuing on the condition an MOT is in place.

Is this good or bad news?

While some of these changes - particularly the option to make car tax payments by direct debit - will make life easier for motorists, concerns have been raised over possible drawbacks to the new system.

According to a survey by the RAC, two-thirds (63 per cent) of drivers fear that abolishing paper tax discs will lead to a rise in the number of untaxed cars on the roads. Furthermore, 44 per cent of respondents thought the change would actually encourage people to break the law.

RAC chief engineer David Bizley said there is "clearly concern" among some people over the issue of enforcement. He added that many motorists still believe the "humble tax disc" is a "simple yet highly effective" way of making sure vehicle owners pay their tax.

"There is real concern that without the need to display a disc, less scrupulous motorists will take a chance and try to evade payment," Mr Bizley continued. "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 £167 million of lost revenues to the Treasury."

However, a spokesman for the DVLA argued that there is "absolutely no basis" to these figures, dismissing the suggestion that abolishing the paper disc will encourage vehicle tax evasion as "nonsense".

"We have a proven track record in making vehicle tax easy to pay but hard to avoid, with over 99 per cent of all vehicles taxed," the spokesman added.

Other findings from the RAC survey showed that over a third (36 per cent) of motorists were not aware of the changes to the car tax system. Nearly half (47 per cent) of the more than 2,000 respondents were unsure about when the reforms were due to take effect.

New car registrations continue to rise

Recent figures suggest that an increasing number of people need to be aware of vehicle tax changes for buyers, with new car registrations rising for the 30th consecutive month in August.

This is despite August being one of the year's quietest months for the new car market, with buyers often waiting until the second round of twice-yearly registration changes come into force in September.

Data from the Society of Motor Manufacturers and Traders (SMMT) showed that a total of 72,163 new cars were registered in August, marking a 9.4 per cent increase on the same month last year.

Year-to-date registrations have now passed 1.5 million units, up 10.1 per cent on the previous year.

SMMT chief executive Mike Hawes said the UK's performance is "particularly impressive" in the context of Europe, with growth in the market having outpaced the rest of the EU for the past two years.

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