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Scrapping The Tax Disc: What Are The Effects?

Tue, 30/01/2018
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Car tax evasion has increased dramatically since the paper tax disc was scrapped, recent statistics have shown.

The paper tax disc was scrapped on 1st October 2014 in a bid to save the DVLA around £7 million per year. However, official figures show that around 755,000 vehicles failed to pay car tax this year – resulting in an estimated annual loss of £107 million. This is compared to a £32 million loss in 2013-14.

Car tax evasion rates trebled over the past three years, with an estimated 1.8% of drivers failing to pay. With transport experts including the chief executive of the AA calling for the discs’ return, was it a mistake to scrap them?

Why Don’t People Pay Their Car Tax?

Paper tax discs acted as a visual deterrent to people who may have considered not paying. But the introduction of the new paperless system meant that it is easier to get away with not paying, and passers-by and police officers can no longer identify cars which have not been taxed.

Tax discs also serve as a reminder for those who may otherwise forget to pay. The new system means that drivers have the option to pay by direct debit so that the tax is paid automatically, but if this is not set up drivers need to remember to pay manually. Although letters are still sent out to remind motorists when their tax is due, letters can be misplaced – while a tax disc served as a reminder every time motorists got into their cars.

If you’re not sure when your car tax is due, you can find out online by entering your registration number on the government website.

Is There Confusion Around the New System?

In 2014 the rules around taxing newly-bought cars changed, which could have caused confusion for some drivers if they were not aware of the rules. While the tax disc on a used car used to be valid regardless of the owner, drivers must now re-tax any vehicle they buy before driving it, even If there are months remaining on it. The seller will be refunded the money for any full months of tax still on the vehicle.

Though the new system has been in place for over three years, it may be possible that some people are unaware of these changes as they may not have bought a new car since before these rules came into force. However, being unaware of the changes is not an excuse for tax avoidance, however genuine the mistake may be.

What are the Repercussions of Not Paying Your Car Tax?

If the DVLA’s system flags up a car as being untaxed and without a SORN, a fine of £80 will be sent to the registered owner. If paid within 28 days, this fine will be reduced to £40, but failure to settle the fine will reduce in prosecution and a maximum fine of £1,000 plus court costs.

The DVLA also has the power to clamp vehicles, and releasing your car requires a fee of £100, or the purchase of valid tax within twenty-four hours. Failure to pay tax results in a surety deposit of £160 for cars and motorcycles, which is refunded if tax is paid for within two weeks. If tax is not purchased, the deposit will be lost and the vehicle may be re-clamped or impounded. A fee of £200 must be paid to release impounded vehicles, as well as £21 per day storage costs. Prosecution costs and fines may also apply. Find out more about vehicle tax penalties.

Where Does Tax Money Go?

Most people do pay their car tax, with 98% of all vehicles correctly taxed. The DVLA collects £6 billion in tax each year, and from 2020 all proceeds from this tax will go into a dedicated fund to help improve major roads across the country.

Will DVLA Advertising Campaigns Deter Criminals?

The new online tax system was designed to make it easier to pay car tax, but in November, DVLA Chief Executive Oliver Morley said the DVLA is still clamping or impounding around 10,000 untaxed cars every month. In the same month, the association launched a “Tax it or lose it” campaign to deter people from dodging car tax. It is hoped that campaigns such as this will remind drivers that they can still be caught avoiding paying tax, even if tax discs are no longer a requirement.

If many people are genuinely forgetting to tax their car or don’t realise they need to tax their new vehicle, it may be that the next few years will show a decrease in untaxed vehicles as people begin to remember and understand how the system works.

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