Motorists are being stung twice by the “double taxing” of cars for the month they change hands, giving the UK Government an annual £38 million windfall, according to research by the AA.
Since October last year, motorists have not been required to display a paper tax disc with records stored electronically by the Driver and Vehicle Licensing Agency (DVLA).
Under the new system, a car’s tax is automatically cancelled when it changes hands. The previous owner can then claim a rebate for the remaining months – but only whole months.
The new owner though has to tax the car immediately, so the same car is effectively taxed twice.
The AA said it had heard of cases where the car was transferred from one member of a family to another but the family were shocked to find that the vehicle excise duty (VED) was not refunded for that month and yet the new owner had to purchase VED for the full month.
Less than two months before the abolition, 42% of a sample of 18,000 AA members knew nothing about it.
More than half (51%) did not know that unexpired tax can’t be passed on and 60% didn’t know about automatic cancellation of the tax disc.
The AA said this has contributed to a 71% increase in the number of cars clamped for being untaxed, up from 5,115 in February last year to 8,741 this February. In March, clampings were still running above 8,000 a month.
AA president Edmund King said: “October’s abolition of the vehicle tax disc and a new process for transferring a vehicle’s ‘keeper’ is a massive change after 90 years of the old and familiar system.
“We are particularly disappointed that there was not an equally massive communications campaign to ensure the UK’s 35 million drivers got the message.”
He added: “UK drivers now pay ‘double tax’ for the month that a vehicle changes hands and the DVLA’s clampers are now netting 3,000 more untaxed cars a month than this time last year. It is right that those who deliberately evade paying vehicle tax are caught and punished. But, it is a very harsh lesson for those who may not be aware a tax disc is now automatically cancelled when a vehicle changes keepership.
“AA members have contacted us expressing outrage that their apparently taxed car was not taxed despite it having a valid disc on display. The DVLA must adopt a cautious and more flexible approach to enforcement during this transition.
A DVLA spokesman said: “Ending vehicle tax at the point of sale is a consumer protection measure to prevent used-car buyers unknowingly buying or keeping an untaxed vehicle which they believe to be taxed.
“Previously, two-thirds of all used vehicles were sold without tax so it is no different for the majority of motorists.
“Any potential revenue gains are offset by automatically refunding more motorists. Between October 2014 and January 2015 we refunded around £120 million, which is more than double the amount in the same period a year before.”