Government Loses £223m After Scrapping Tax Discs

Tax DiscsThe UK Government has lost £223m in the 6 months following the change from paper tax discs to online tax.

Paper tax discs were first issued in 1921 and replaced in October 2014 by an online service, in which UK tax payers could keep up to date with their tax payments online. This decision was made to save money and paper usage by the DVLA. It was thought by some critics that at its time of implementation, the new system would cause confusion, with the National Audit Office backing this up, stating that they believed it would cause an initial increase of people not paying their vehicle tax. This seemingly has been the case, however its thought that this amount will even out in coming years.

Figures obtained from a Freedom of Information request, put into place by the Financial Times this year, saw an instant decrease in revenue for the DVLA. Between October 2014 and March 2015, the DVLA collected £2.7bn in vehicle tax excise duty – which is a drop of £223m on last year’s figures released by the DVLA. One of the biggest drops that the DVLA has ever seen.

DVLA chief executive Oliver Morley stated in response to the loss that almost 99% of vehicles on UK roads are taxed correctly. And this was backed up from figures released by the Treasury, correlating that billions of pounds of vehicle tax is passed through them each year. Morley has also stated that he still believes that online tax is a better and easier way for the British public to pay their tax, and saves the DVLA money by being completely digital.

Since the tax disc was replaced in October 2014 – the dvla has been using a network of cameras throughout the UK that are all linked to a dvla database. This ensures an easy catch for drivers who are on UK roads illegally due to out of date tax payments. Motorists are usually caught out by motorists changing addresses or missing reminders due to them being sent to the wrong address. Ironically, the change to an online system was originally thought to have brought in more savings for the DVLA, Luke Bodset from the AA stated – however they’ve so far done the opposite for the DVLA. Hopefully in the coming years tax will even itself out and the flow of money from UK tax payers will show a smoother transition from the paper tax disc.