Are you being double taxed on your car?

5 May 2015

tax disc Since the tax disc system changed in the UK, there's been a bit of confusion. It looks like some drivers are being 'double taxed' for when their cars change hands, according to the AA.

The motoring agency reckons that, as a result of this double tax, the Government are getting £38 million in the process. So you can imagine that they're in no rush to fix that.

As you know, since the change, everyone's tax details are stored online, and under this new system, car tax is automatically cancelled when a vehicle is sold to someone else. However, the person who sold the car is only able to claim back a full month, not a fraction of a month, while the buyer has to tax the vehicle immediately.

So if you sold your car on the 3rd of the month, you can't claim a refund on the tax for the rest of the month, while the new owner pays for the full month from the 1st of the month. That means, the car has generated two amounts of tax for a single month.

The AA say that this partly the reason why there's been a 71% increase in the number of cars clamped for being untaxed.

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."

"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."

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."

TOPICS:   Motoring   Tax

5 comments

  • Chris
    "Double tax", for only a single month, not the entire year. Still, good reason to get a low emissions car that may be £0 VED anyway.
  • Albi
    Remember when the state worked for the good of its people?
  • Father J.
    This is very old news, I believe the popular terminology is 'stealth tax'. But yes, why not buy a brand new car with zero VED. Because we can all afford that, can't we?
  • Han S.
    @Albi - No
  • Big M.
    No-one spends money on a new car just to save on tax. Look at my new car, only £15,000 and it saves me £250 per year on tax. No brainer!

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