‘Double taxing’ of cars gives Treasury £38 million

Motorists are being hit by the “double taxing” of cars for the month they change hands under new regulations accompanying the scrapping of the need to show tax discs on windscreens, the AA has said.

Since October, motorists have not been required to display their tax discs on their windscreens. Picture: Getty

This double tax is providing the UK government with an estimated £38 million windfall, according to the motoring group.

Since October, motorists have not been required to display their vehicle excise duty (VED) car tax discs on their windscreens, with the Driver and Vehicle Licensing Agency (DVLA) logging tax details electronically.

Under the new regime, a car tax is automatically cancelled when a vehicle changes hands. The old owner can claim back in tax only full months and not part ones, with the new owner required to tax the car immediately.

The AA said it had heard of cases where a car was transferred from one member of the family to another but the family were shocked to find that VED was not refunded for that month, and yet the new owner had to purchase VED for the full month.

“Hence the family were paying tax twice for the same month on what has become a ‘doppelganger’ vehicle,” the AA said.

Less than two months before the October changes, 42 per cent of a sample of 18,000 AA members knew nothing about them.

More than half (51 per cent) did not know unexpired tax could not be passed on and 60 per cent did not know about automatic cancellation of the tax disc. The AA said this had contributed to a 71 per cent 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 2015, 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 went on: “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.”