Car Tax – Why Are People Not Paying?

- by Isla Williams

Do you think you’re able to avoid paying car tax, now that it has gone paperless? Cashfloat, a short term direct lender brings you all you didn’t know about car tax, what it is, along with how and why people avoid paying it.

car tax - cashfloat - why are people not paying
In the article below we shall be looking at:
  • Why do we have car tax?
  • The history of car tax
  • Has the change from paper tax disks encouraged avoidance?
  • When does one have to pay car tax?
  • Can one pay car tax in instalments?
  • Is the car tax system different now it is online?
  • Does the type of car I drive affect car tax?
  • How do the authorities catch car tax dodgers?
  • What are the penalties for on-payment of car tax?
  • Can non-payment of car tax cause other problems?

Why do we have car tax?

The abolition of the old paper tax disk in October 2014 resulted in a fall of £93 million in revenues for the DVLA (Driver and Vehicle Licensing Authority) in the following tax year.

The car tax system had remained virtually unchanged for decades. One had to display a round paper car tax disk in the vehicle windscreen. It showed the month and year, one has paid the vehicle tax up to. In 2015 the government legislated for the updating of the vehicle tax system to be automatic, with the application system changing to online, with no tax disk displayed on the vehicle. In this article, we look at the whole story, and the effects it has had.

car tax - cashfloat - why are people not paying

Car tax, formally known as Vehicle Excise Duty (VED) in the UK is an excise duty levied on most types of vehicles used or parked on public roads throughout the UK. The government administer the tax online, and it is compulsory. Even vehicles which currently have a “free” category of car tax, they must still apply for in the usual way before the due date. If not the authority will consider it like you have not paid tax, and subject to disruptive and expensive clamping or removal by the authorities.

History of vehicle tax

Vehicle tax was first introduced in the UK in 1888, with motor vehicle taxation starting in 1920. Initially, from 1920 to 1937 the car tax was specifically raised to fund road building. After 1937 the Road fund, into which vehicle tax was paid, was wound up. As a result car tax simply went into the general taxation pot. Many motorists still seem to think that car tax should pay towards road repairs now. However, even back in the 1920s and 1930s the amount of money raised by Vehicle Excise Duty was insufficient to cover road building and maintenance costs. There had always been a contribution from general taxation, so the reason for having the tax ring-fenced was rather redundant.

car tax - cashfloat - why are people not paying

Paper tax disks change

Has the change from paper tax disks encouraged avoidance? It would appear that it has. Many people warned at the time that the abolition of the highly visible tax disk would encourage avoidance. However, the government argued that the old paper disk based system of collecting tax on vehicles was both inefficient and susceptible to people displaying forged disks. Many regarded this as yet another manifestation of the government’s austerity programme. Merely aiming to reduce costs. The government claimed, before the introduction of the new paperless system that over 99% of motorists paid their car tax on time.

The claim that the new computerised system would enable enforcement using the network of Automatic Number Plate Readers. They are roadside, or in vehicle cameras, the police and other authorities operate. The police have direct access to DVLA records via the national police computer. They use this to decide if a vehicle has been taxed as a method of enforcement. It replaces visual examination of the old displayed tax disks.

car tax - cashfloat - why are people not paying

It would appear that the early results of the new automated paperless system for VED was a failure. In 2015/16 DVLA lost over £90m in revenues. To counter non-payment of car tax the government authorises certain bodies within the UK with powers to clamp and impound offending vehicles. These include the police, councils, DVLA, VOSA (Vehicle and Operator Services Agency) and other bodies with statutory or other powers such as airports or railway stations.

When does one have to pay the tax?

Car tax is payable on the anniversary of the first registration. Not at the month end as operated on the old paper tax disk based system. It is vital that you check carefully to ensure you tax your car on time to avoid any penalties for being untaxed. Saying you thought it wasn’t until the end of the month is not an acceptable reason.

Can I pay monthly? Yes. The standard published fees are for payment in cash or by direct debit in full for the entire amount on the due date. The second cheapest easy payment options are by direct debit. You can pay every 6 months or by 12 equal monthly direct debit payments. The most expensive way of paying is in cash each 6 months.

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About The Author
Isla Williams
A born writer, Isla had her first article published at age 9 in a local magazine. Isla's joy emerges when pen strikes paper, and she can tap into her creative self. "I love to share knowledge/information and help others to be in the know while being as friendly as I can.” Isla is an accountant by profession but has taken a break to do what she enjoys most - writing.
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