What do the road tax changes mean for you?
The new car tax system isn’t being phased in gradually, UK motorists now no longer need to display a road tax disc on their car windscreen.
Even if you have time left to run on your car tax, the little disc can be removed and binned, framed for posterity or disposed of in a burning longboat on the garden pond, whatever you feel is appropriate.
This doesn’t mean you don’t have to pay car tax though. The DVLA will send you a reminder when your road tax is up for renewal in the time-honoured fashion, you can then pay your road tax online, over the phone or at the Post Office.
The road tax price bands remain the same, as do the existing options of paying for 12 or 6 months tax upfront but from November 1st 2014 there will be the option of paying your car tax monthly. This new monthly option arrives in tandem with the facility to pay your road tax by Direct Debit.
Drivers paying in monthly instalments from their bank accounts will be subject to a 5% surcharge on top of the road tax price itself. That’s less than the 10% that’s added when you pay for six months tax, an option currently used by 23% of motorists. Only the one-off annual payment comes with no extra charges.
The key advantage of paying your car tax by Direct Debit is that the DVLA will continue taking the payments until you tell them to stop. It means that you’ll no longer need to remember to renew your car tax, it'll just happen and you can get on with more exciting stuff - like remembering your MOT.
What happens to your road tax when you sell your car?
Recent reports suggest that there is still some confusion around the tax when selling and buying a used cars, with figures showing that the number of drivers being clamped by the DVLA has increased by around 3,000 a month.
Under the new car tax system, any remaining road tax will not transfer to the new owner with the vehicle. Instead, the seller can get a road tax refund on any tax remaining on the vehicle, while the buyer has to pay to re-tax the car.
The tax refund on a sold car will be sent automatically when the DVLA receives notification that the car has been sold, scrapped, exported or taken off the road with a Statutory Off Road Notification (SORN).
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Sellers are expected to inform the DVLA of any change of ownership straight away or face a £1,000 fine. If they don’t, they could also still be liable for speeding or parking fines incurred by the new owner.
Information on whether or not a car is taxed is available online via the Government website. All you need is the make and model of the car plus the registration number.
Figures obtained by the Guardian revealed that the DVLA was now clamping around 8,000 motorists a month, compared to 5,000 per month prior to the tax disc change. In total around 100,000 vehicles are expected to be clamped in 2015 compared with 60,000 the the year before.
However, these latest figures don't reveal whether those clamped are buyers of used cars unwittingly not taxing their cars, or whether the new system is doing a better job at catching those drivers that have been dodging the tax for some time.
The DVLA claims that it sends new owners a warning letter before clamping or towing their car away and also says that it has written to new owners to make them aware of the changes.
Is there a catch to the new Vehicle Excise Duty regime?
So far, so good for the new road tax system but as often seems to be the case, there is a catch.
The problem that's getting motorists riled centres around the refund you get on outstanding road tax when you sell your car. When ownership of a vehicle is transferred the previous owner gets a refund on any outstanding road tax but that refund is calculated from the beginning of the next month. The new owner, on the other hand, has to tax the car anew and their bill is calculated from the beginning of the current month.
What this means is that the Government effectively collects two lots of tax on the car for the month where ownership is transferred, one from the new owner who pays for that month and one from the previous owner who doesn’t get the tax for that month included in their refund. It's sneaky stuff and should give a useful boost to the exchequer, but at the expense of motorists.
What will the tax disc changes mean for policing road tax?
It’s been the case for a while that most inspectors patrolling the roads in search of un-taxed vehicles use automatic number plate readers instead of visually checking the tax disc. The police also rely heavily on number plate recognition cameras to catch untaxed drivers out on the road so in that respect, very little will change.
What the new system brings is an estimated saving to the tax payer of £10million per year.
The tax disc has had a good innings. More than 1.7 billion of them have been issued since 1921 and in 2013 a total of 42.2million were issued by the DVLA. You can’t stop the relentless march of technology though and the new system promises real improvements in the UK road tax system that should benefit motorists and save money.