The annual fiddle of trying to release a mint tax disc from its perforations without tearing it will soon be history. From October onwards, the tax disc is to be replaced by an electronic equivalent. The aim is to abolish administration and cut costs by putting the process online. It sounds sensible, simple and straightforward. But as with most things to do with the DVLA the reality is very different.
The outgoing paper tax disc moves with the vehicle. The new electronic Vehicle Excise Duty (VED) will be non-transferrable; it will ‘belong’ to the vehicle’s owner. When a car is sold, it will no longer be taxed and the previous owner will get a refund. The new owner will thus have to ensure the car is taxed before they drive it away. And this is where things get sticky.
For a start, if a dealer buys a car and wants to run it on the road so that his customers can test drive it, he must use trade plates. If he doesn’t have those he’ll have to tax the car, which, as the new tax system is linked to the V5C log book, means he’ll show up as an owner. “It will instantly add another owner to that car,” said Philip Nothard consumer expert for CAP Automotive.
“The trade is worried about other things too,” he added. “Currently, if a dealer buys a group M (255g/km of CO2-plus) car, having the £500 annual tax built into the sticker price makes that car easier to sell.” The implication is this will have an instant – and undesirable effect on the value of high CO2 vehicles. It’s fine if the Government wants to drive these off the road but it’s hardly fair that it does so by penalising existing owners.
Then there’s the heads DVLA wins, tails we lose issue of remaining tax. Let’s assume Mr Dealer taxes a car for 12 months at the beginning of November. I then buy that car on November 25. My road tax will start from the beginning of November so I’ll have to pay for 12 months but will only get 11 months and a few days’ worth of tax. The dealer meanwhile only gets a refund for 11 months. So the DVLA is being paid twice for a period of time where the car has probably barely been on the road.
Another question mark covers all the cars that are currently sitting on dealer forecourts with valid tax stretching into next year. “As these cars are ‘in trade’ and have no current owners, who does the rebate go to? The dealer or the previous owner?” Nothard asked. It’s a good question. According to the DVLA, if you don’t apply for a refund, that tax will be lost because any new owner will have to re-tax the car. The message is: if you’re selling a car, make sure you take the old tax disc with you.
The DVLA claims making VED entirely electronic will save government around £3m a year and business £7m a year in administration fees. Yet it appears to make the process of buying and selling a car a more costly and inconvenient one. Drivers will be able to buy their tax discs on a monthly basis for a five per cent surcharge, the DVLA counters. That’s looking fairly insignificant as benefits go, considering the potential unwanted aggravation and extra cost it’s introducing to the buying and selling process.
This article first appeared in the Daily Telegraph Cars