Car tax evasion triples since paper disc abolished

The abolition of the paper car tax disc has resulted in a tripling of the number of drivers evading car tax and now represents a loss to the Treasury of around £107m a year, according to statistics from the Department for Transport (DfT) and the DVLA

The DfT data relating to Great Britain shows that in 2013/14, the last year of the paper disc, £35m of revenue was lost, representing 0.6% of the total.  The figure for 2017/18 is £101m or 1.7% of the total revenue.

DoT has also begun collecting data for the UK (Great Britain plus Northern Ireland), which shows a total £107m of tax was not paid in 2017/18. At the time of the switch to an online system, the government said it would eventually save the DVLA around £7m a year.

Separate data pulled together by the DVLA confirms that the rate of unlicensed vehicles observed on the road was higher in 2017 than when previously surveyed in 2015.

In 2017, the rate of unlicensed vehicles in traffic in the UK was estimated to be 1.8%, compared with 1.4% in 2015 and 0.6% in 2013.

About 1.9% of all vehicles in stock were unlicensed. This is equivalent to about 755,000 vehicles.

The DVLA agrees this could cost about £100m in lost vehicle excise duty (VED) revenue over the course of a year, about 1.7% of the total amount due. However, it says some of this potentially lost revenue will have been recovered through DVLA enforcement activity or by vehicle keepers paying arrears of duty at a later date.

The motoring body the RAC described the figures as ‘extremely concerning’.

Nicholas Lyes, RAC public affairs manager, said: ‘Clearly, since the tax disc was abolished in 2014 there has been a significant increase in untaxed vehicles on our roads, with the figure now in excess of three-quarters of a million.

‘This latest data suggests it is now costing the Treasury more than £107m in lost revenue over a full year – higher than in any year since 2007. The Treasury noted that abolishing the paper tax disc would save £10m, however it is now seems the changes are proving extremely costly.

‘From 2020, VED receipts will also directly fund improvements to our strategic road network, so it is vital every effort is made to make sure we tackle evasion so our road network does not lose out on essential investment.’

The RAC said a third of untaxed vehicles had changed hands since September 2016, indicating that many drivers were not aware that tax does not carry over when ownership changes.

The DVLA also said that it was running a campaign warning the rising number of people still driving cars that had been declared as off the road to tax their vehicles.

DVLA vehicle excise duty tax evasion statistics are here.

DfT data is here.

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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