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VED receipts drop after new rules introduced

VED receipts drop after new rules introduced

The use of paper tax discs for cars was first introduced in 1921. In October 2014, the requirement to display a motor disc on a vehicle windscreen was removed. Cars are now checked against the DVLA’s electronic register which the public can use to check the tax status of any vehicle online. Cars can also be checked by automatic vehicle number plate recognition technology.

At the time the changes were introduced, the National Audit Office had claimed there would be no ‘material increase in lost revenue’ as a result. The DVLA has now published annual accounts for the year ending 31 March 2016. The accounts show a drop in Vehicle Excise Duty (VED) income from £6.023 billion at the end of March 2015 to £5.93 billion a year later. This is a year on year drop of £93 million and is significantly higher than had been forecast.

The DVLA comments in the report that:

‘As the last tax discs issued expired on 30 September 2015 it is likely that during the transitional period with customers becoming accustomed to the new tax changes that VED collection was affected. The agency has taken considerable steps to ensure that motorists are aware of the vehicle tax changes and have responded quickly where there have been issues.’

The DVLA stress that they are clamping down on VED evasion and actively targeting those who don’t pay and break the law. However, there is concern from motoring organisations that the tax take from VED could continue to fall with some predicting that paper tax discs may return one day. This remains to be seen but it will be interesting to see if the DVLA can increase compliance with the new system.