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Ministers lose £80m in revenue after scrapping car tax discs

By 12th October 2016No Comments
DVLA decision found to have backfired as figures show government has lost as much as eight times as it hoped to save.
The government looks to have lost as much as £80m of revenue as a result of its decision to scrap car tax discs a year ago. The move has also led to a doubling in the number of unlicensed vehicles on British roads.
The Driver and Vehicle Licensing Agency (DVLA) ended the need for drivers to display a valid tax disc in October 2014, saying that the move would save the taxpayer £10m a year by making the system more efficient. However, that decision looks to have backfired, after official figures published on Thursday showed that the exchequer has lost as much as eight times the intended saving.
An analysis of road users carried out in the summer showed that about 1.4% of vehicles were being driven without vehicle excise duty. This was up from just 0.6% two years ago, when a disc was still required. The Department for Transport (DfT) estimated that about 560,000 vehicles were untaxed. Motoring organisations claimed when the measures were announced that the abolition of the tax disc after 93 years – part of the government’s purge on bureaucracy – would fail.
Not everyone will rejoice at the passing of the tax disc
Read moreThe move, which suffered a number of admin problems at the start, also led to thousands of innocent motorists having their cars clamped. Many of those who have not taxed their car may well have failed to receive official notices reminding them to get their tax renewed in the post. Under the old scheme, the tax disc provided a visual reminder when it was due. It was also easy for police to spot untaxed cars – something that it is no longer possible.
Last week it emerged that the DVLA had immobilised or towed away almost 100,000 cars in the past 12 months – a 58% rise on the previous year. It said it now posts almost 3m reminders each month, at considerable cost.
David Bizley, the RAC’s chief engineer, said: “These are very worrying and disappointing statistics indeed. Sadly, the concerns we raised about the number of car tax evaders going up at the time the tax disc was confined to history have become a reality. We really cannot afford for this to increase again, for the sake of both road safety and the country’s finances. Hopefully, much of the increase in evasion is due to the system being new, and these figures will reduce as motorists become more familiar with how it works.”
The DfT estimates the number of untaxed vehicles by carrying out a roadside survey every two years. Figures suggest that the loss to exchequer was £80m in the last year, up from £35m in 2013.
DVLA said it has always recognised the potential for the number of untaxed vehicles to rise “temporarily”, and that a significant chunk of the £80m would be recouped by pursuing tax evaders. Last year, it collected £33m through the process.
Oliver Morley, the DVLA’s chief executive, said: “Almost 99% of all vehicles on the road are correctly taxed: that’s around £6bn in vehicle tax passed to the Treasury every year. We write to every registered vehicle keeper in the UK to remind them when their tax is due, and we have introduced a range of measures to make vehicle tax easy to pay. At the same time, we are taking action against those who are determined to break the law.”

Tim Kelly

Tim is a highly qualified Independent Engineer with over 20 years experience as an Engineering Assessor of damaged vehicles.

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