Removal of paper tax disc sees a plunge of £93m in tax payments

Paper tax discs have been gone for some time now back in 2014. When the DVLA updated their systems and did away with the paper version, they have vastly underestimated the amount as to which tax receipts would drop.

The DVLA have produced a report, which shows the huge decrease in expected tax revenues with a black hole of £93m. The DVLA expected this to be a big cost saving exercise for the future with removing all of the paperwork and making it a fully electronic service going forward. Although this is the case in terms of ease of use and less administration, they did not foresee a drop such as this.

So what have the DVLA said as to why this figure is so high? Well the DVLA stated that a great deal could be attributed to the public getting to grips with the new scheme. The last tax discs issued (paper variant) would have expired in September 2015. The transitional period between affected customers then getting to grips with the new system could take some time to filter through.

One other issue where the public has seemingly had issues with the new car tax scheme is when consumers purchase a car expecting it to have tax. Car tax ends when ownership ends rather than passing any saving onto the next owner. Even now you still see vehicles advertised with “Six months tax” this is false and goes to show that even some dealers are struggling with the new rules.

Another big factor is that a lot of the driving public has switched to lower band emission vehicles, which of course means lower tax payments. Whether we will have increases across the board in the future to close this gap meaning the customer is paying more for their car tax remains to be seen. This is more akin to car insurance whereby costs are passed onto the end customer due to amount of claims and insurance tax.