The number of unlicensed cars has trebled since paper tax discs were abolished three years ago, it emerged yesterday.
The Government claimed it would save £10million a year by reducing tax evasion and cutting costs when it replaced paper discs with an online system in October 2014.
But the policy, introduced by then-chancellor George Osborne, was described as a ‘failure’ last night as it revealed a dramatic surge in motorists either dodging tax deliberately or forgetting to pay it.
The Government claimed it would save £10million a year by reducing tax evasion and cutting costs when it replaced paper discs with an online system in October 2014
The Department for Transport (DfT) predicted the Exchequer could lose a staggering £107million from evasion of Vehicle Excise Duty this year.
This would be the highest level in a decade and around three times the £35million lost in 2013/14 – the final tax year before the reform was introduced.
The number of vehicles that are unlicensed has roughly trebled since 2013/14 to 755,000.
This equates to 1.9 per cent of all vehicles – including those that are not driven – in the UK, and is up by a third from 560,000 in 2015.
The DfT said 1.8 per cent of vehicles on the roads are unlicensed – three times the 0.6 per cent in 2013.
The government publishes these figures every two years.
In its report, the DfT ‘admitted the increase could be due to the effect of major changes to the vehicle licensing system which took place in October 2014, particularly the automatic refund of tax when a vehicle changes hands’.
But the policy, introduced by then-chancellor George Osborne, was described as a ‘failure’ last night as it revealed a dramatic surge in motorists either dodging tax deliberately or forgetting to pay it
Previously any remaining tax on a vehicle was transferred to the new owner when it was sold.
Under the new system, any existing tax ends when a vehicle changes hands and the previous keeper is automatically refunded the remaining tax. The new owner must tax the vehicle immediately. But the government figures indicate that many motorists are failing to do this.
Just over half (51 per cent) of untaxed cars were more than ten years old, with just over a third (34 per cent) changing hands since September 2016.
The DfT also said the abolition of paper tax discs ‘removed a visual in-vehicle reminder of the tax disc expiry date’.
The previous system evidently proved more effective than the reminders that are now emailed to drivers by the Driver and Vehicle Licensing Agency.
However, it’s not just drivers forgetting to tax their cars – the number of motorists deliberately dodging tax has also risen sharply. There was a twelve-fold increase in the number still driving despite declaring their vehicle was off the road and not eligible for tax.
This rose from 1 per cent of unlicensed vehicles in 2015 to 12 per cent – equating to almost 68,000 drivers.
RAC public affairs manager Nicholas Lyes said: ‘These figures are extremely concerning. The principle of abolishing the tax disc to introduce greater efficiencies has, so far, evidently failed. Arguably more drivers are now prepared to try their luck and see if they can get away with not paying any vehicle tax at all.’
A Department for Transport spokesman said: ‘As DVLA’s current campaign stresses, driving a vehicle without taxing it is breaking the law and the DVLA will continue to crack down on drivers who do.’