Ripped Off

The proposal to get rid of paper tax discs from October 2014  will carry a sting in the tail for everyone buying a used vehicle after that date: they will have to tax it immediately instead of being able to take on the vehicle’s existing unexpired tax. While intended as a move to stop fraudsters, the tweak to the rules would occidentally lead to a windfall for the Treasury.

The ‘Draft Clauses and Explanatory Notes’ for the proposed Finance Bill 2014 say: It will no longer be possible to transfer the benefit of a vehicle licence when there is a change of registered keeper. As a consequence of this, where there is a new registered keeper he/she will be obliged to take out a new vehicle licence when the vehicle to which the vehicle licence relates is transferred to him/her. The reason for now preventing vehicle licences being transferred from registered keeper to registered keeper is to avoid a new registered keeper unknowingly keeping an unlicensed vehicle. For example, in the absence of a paper licence a vehicle may be purchased supposedly with the benefit of a vehicle licence. The new keeper would believe that the vehicle was licensed, but the former keeper could apply for a refund of VED without the knowledge of the new keeper resulting on the new keeper having an unlicensed vehicle.”

The reasoning makes no sense, at all as the ability to instantly check any vehicle’s tax status online at the www.gov.uk/check-vehicle-tax website rather blows a hole in the idea that there’s no way the new keeper could tell whether his vehicle was taxed or not.

An old cynic like me, might say that since you can only get refunded for complete remaining months of VED, (Vehicle Excise Duty) the government stands to scrape up a lot of part-months of extra tax revenue. Official figures show that around 7 million used vehicles get a change of ownership each year. If, on average, each has half a month’s worth of VED remaining, that’s 3.5 million extra months of VED being paid each year. The equivalent of 291,666 years’ worth. If we estimate that the average annual VED cost per vehicle is £200 (a fair guess given the spread of rates), then that’s somewhere in the region of £58.3 million pounds windfall to the tax man. Year on year that's not a bad haul, really.