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Car Tax Goes Digital

Car Tax Goes Digital

It’s the end of the road for paper tax discs, as the DVLA replaces them with digital records in order to cut costs for drivers.

The move comes as part of the Department for Transport’s pledge that the government will make transport more cost effective, made following 2013’s Motoring Services Strategy consultation.

Changing the Law

After 1 October 2014 paper tax discs will no longer be issued, and drivers will no longer have to display them on their vehicle windscreens. Then, from 1 November, motorists will be able to pay vehicle tax via Direct Debit, and the DVLA will hold their tax records in a digital database.

As the first tax disc was issued on 1 January 1921, and drivers have been expected to display them as proof of tax payments ever since, it’s a significant change to vehicle tax law.

FireShot Screen Capture #372 - Tax Discs

Car tax discs from 1921 and 2014

It’s one that most drivers are welcoming though, as the new system should see car tax prices drop significantly, due to the savings made in administrative costs now tax discs no longer have to be produced and posted to each driver.

The surcharge applied to car tax payments will reduce from 10% to as little as 5% for those paying monthly or biannually, and disappear entirely for those who choose to pay their car tax on an annual basis.

The Direct Debit payment scheme will also allow motorists to pay their vehicle tax in monthly instalments, instead of having to provide the 6 or 12 months’ worth of funds currently required for paper proof.

The Treasury hope that this will make ‘dealing with government [taxation] hassle free’ as well as more affordable, particularly for new car owners making tax payments for the first time.

Making Taxes Fairer?

As well as making it easier for car owners to pay their taxes, the new system also makes it harder to avoid paying them. Police forces nationwide will now use automatic number plate recognition cameras, which record a car’s number plate, to access the vehicle’s tax records and make sure they’re up to date.

FireShot Screen Capture #374 - Car Tax Page

The Government want to ‘reduce hassle’ for taxpayers

When selling a car, owners will also have the option to register their sale and claim back any payments they’ve already paid in tax for their old car.

However, it’s now entirely up to the previous owner to register any change in vehicle ownership. If they don’t, they could still be held liable for tax payments on their old car, or a fine of up to £1000.

Out with the Old…

Generally, however, it seems to be good news for drivers, who’ll have more flexibility on when they pay their taxes than ever before.

With the reductions in vehicle tax, it’s particularly good news for today’s learners, who’ll be among the first to take advantage of the new system when paying tax on their first car.

With public transport prices set to rise again in 2015, has there ever been a better time to get behind the wheel?

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Car Tax Goes Digital