Vehicle tax changes: what you need to know

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So it’s finally goodbye to the now seemingly old-fashioned, perforated piece of paper that was the car tax disc, which drivers no longer have to display in their front windscreens.car_insurance

The tax disc has been a staple of British motoring for the last 91 years but the Government has finally done away with the little circle of coloured paper in favour of a solution much more befitting of the modern age.

Road cameras will check your vehicle

From now on, road cameras will read your number plate as you drive by them and, in a millisecond, check with a central computer system if you’ve paid your road tax or vehicle excise duty, as it should be called; it is, after all, a tax on the vehicle you drive, not on how much you use the UK’s road system.

However, the new vehicle tax rules being put in to place not only affect how you show you’ve paid your road tax. Here’s what’s changing and how to go about paying for the taxation of a car registered in the UK:

1. Payment options

Not only can you still pay via the internet, phone or your local post office, you will from now on also have the option to pay your vehicle excise duty by direct debit.

Most motorists should welcome the change as it does away with the potential for forgetting your road tax is due, and possibly facing a significant fine.

Remember that if you do choose to pay by direct debit, the payments will continue until you cancel them or tell the DVLA that you no longer own a car.

The direct debit facility isn’t available to those whose vehicle is registered as part of a fleet scheme or is an HGV.

For the direct debit option, you need to choose the frequency of payments. If you pay monthly or half-yearly there’s a 5% surcharge, but if you pay annually all in one go there isn’t.

2. Renewing vehicle tax

The only change to how renewal is carried out involves the direct debit option as outlined above.

Some drivers have said they’re worried they’ll forget they need to pay without the actual tax disc in their car window to remind them. However, the DVLA says it will be issuing reminders to all drivers for when their renewal date is due.

3. Selling a vehicle

Vehicle excise duty can no longer be transferred along with the vehicle you’re selling.

The new system means that you’ll receive a refund automatically for any outstanding months left after you’ve told the DVLA that you’ve sold a vehicle and they’ve received proof of it. So it will be the new owner’s responsibility to tax the vehicle.

This is the same if you declare to the DVLA that your vehicle is ‘off-road’ or that it has been exported to another country.

Refunds will only be given for a full calendar month, so you’ll be a little bit financially better off if you sell at the end, rather than the start, of a month!

4. Buying a vehicle

You now have to pay road tax so that it starts from the day a second-hand car becomes yours (and before you first drive it on a public road).

For speed and simplicity this can be done at any time online using the ‘New Keeper Supplement’ element of the vehicle registration certificate.

5. If you drive other people’s vehicles

For personal and work reasons, some people are insured to drive other people’s cars and have expressed fears that they could find a vehicle they’re using is untaxed and illegal to drive without being able to simply check a tax disc in the window.

However, the DVLA says that drivers who are worried will be able to check the tax status of any vehicle by visiting www. gov.uk/check-vehicle-tax and inputting details of the car they’re due to drive.

Is car insurance affected?

The changes to the tax rules regarding the processing and payment of vehicle tax don’t affect your insurance cover.

If you need to make a claim for your vehicle on your insurance cover for any reason, and your vehicle excise duty is out of date, you should still be able to claim. It’s only if your car is without a valid MOT that your insurance can be declared void.

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The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.