Tax Disc Scrappage Drives Revenue Drop

Scrapping the paper car tax disc has resulted in a reduction of £200 million in tax revenues for the DVLA (Driver and Vehicle Licensing Agency).

Originally launched in 1921 – the same year as the Austin 12 – the humble tax disc sat mostly unnoticed (other than to traffic wardens of course) to the inside of car windscreens for 93 years. In 2014 however technology caught up and an online payment system was introduced at the cost of £1 million with the government financial watchdog claiming at the time there would be no "material increase in lost revenue."

Figures published recently however reveal a year on year reduction. Between March 2014 and March 2015 £2.7 billion was collected from motorists - approximately £223 million lower than the amount paid between October and March the previous year.

The figures for the full year to March 2016 are due to be released after the EU referendum on June 23.

The National Audit Office said the change-over "has likely contributed to an initial increase in reported levels of non-payment, which has led to additional compliance and enforcement activity."

Now the DVLA is turning to debt collectors in an attempt to recover the monies.

Oliver Morley, DVLA chief executive, said: "Almost 99% of all vehicles on the road are correctly taxed: that's around £6bn in vehicle tax passed to the Treasury every year.

"We write to every registered vehicle keeper in the UK to remind the when their tax is due and we have introduced a range of measures to make vehicle tax easy to pay.

"At the same time we are taking action against those who are determined to break the law."

By Tracey McBain