News story

Direct Debit and abolition of the tax disc

The government is changing the law in 2014 to reduce tax administration costs and burdens associated with vehicle tax.

The Department for Transport (DfT) made clear in its recent Motoring Services Strategy consultation that the government is committed to offering high quality and cost effective services to the public and businesses. DfT and DVLA have listened to the views of both businesses and the public to remove unnecessary burden and provide modern and efficient services to meet their needs. This includes getting rid of unnecessary paper where possible and making it easier for people and businesses to use government services.

Today (Thursday 5 December 2013), the Chancellor of the Exchequer announced that the government will change the law in 2014 to reduce tax administration costs and burdens associated with vehicle tax.

DVLA will offer motorists the ability to spread their vehicle tax payments should they wish to do so. For vehicle tax starting from 1 November 2014, motorists will be able to pay vehicle tax by direct debit annually, biannually or monthly. There will be no additional handling fees for annual payments but to limit the impact on the public finances there will be a small surcharge of 5% of vehicle tax for biannual and monthly payments. This is half of the 10% surcharge that is currently applied to 6 monthly tax discs and which has been in existence for a number of decades.

Also from 1 October 2014, the paper tax disc, first issued on 1 January 1921, will no longer be issued and required to be displayed on a vehicle windscreen. Vehicle tax will still need to be paid but with DVLA having a digital record of who has and has not paid, a paper tax disc is no longer necessary as proof that vehicle tax is paid. The vast majority of motorists pay their vehicle tax with latest figures confirming that over 99% of motorists’ tax their vehicles on time… Most on-road enforcement action is now based on using Automatic Number Plate Readers. These cameras use the number plate rather than a visual inspection of the tax disc. The police also have access to DVLA records via the police national computer. There are significant savings for fleet operators and other businesses from not having to handle the administration of tax discs.

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