Thursday, 14 May 2015

Drivers in the UK Paying Double Tax on Cars . . .


Drivers in the UK Paying Double Tax on Cars

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Last October, the Driver and Vehicle Licensing Agency (DVLA) in the UK replaced the paper tax discs system with a new electronic tax logging system. The old system was abolished in a bid to save £7m in administration and printing costs. However, it seems there is a bit of confusion among motorists over how cars are taxed under new system, and according to AA, many drivers are paying "double tax" on their cars.

AA reveals that British drivers are losing £38 million a year in "double tax" on their cars for the month in which the ownership of their vehicle changes. The error was noticed when new electronic system was implemented.

AA said that there are many families that have paid "double tax" on a vehicle for a month when the tax license was transferred from one family member to another.

Under new regulations, vehicle tax can't be transferred between owners. When the tax license is transferred from one person to another person, the car tax is automatically cancelled. In this case, the new owner has to pay the vehicle tax immediately, but the old owner can claim tax refund only for the full month.

It other words, if a person sells a car on May 3, he/she can't claim tax refund for the rest of the month. However, the new owner will pay tax for the full month.

Drivers in the UK losing millions in tax disc confusion

According to AA, there were many cases where in a family, a car was transferred from one member to another and the VED was not refunded to old owner for that month, but new owner had to deposit VED for the full month.

"Hence the family were paying tax twice for the same month on what has become a 'doppelganger' vehicle." a spokesman for the AA said.

According to AA, a 71% increase was observed in the number of cars being clamped for the month of February 2015 (compared to February 2014.)

AA president Edmund King said that scrapping of the vehicle tax disc and introduction of new vehicle transfer process is a "massive change" in the 90-year-old system, which was familiar to most people.

Edmund King has also expressed his disappointment over "communications campaign" which could not convey the message to all of UK's 35 million drivers.

AA has revealed that 42% of its members (out of a sample of 18,000) had no idea about new regulations even two months before the October changes, and about 51% were unaware of the new rule that unexpired tax could not be passed on.

The DVLA however has rejected claims made by AA stating that the new system has been introduced to protect drivers from penalties.

A DVLA spokesman stated: "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."

According to DVLA, any revenue gain made by this new system is offset by the refund given on full months of tax to motorists. DVLA claims that it refunded £120 million in vehicle tax between October 2014 and January 2015, which is double the amount refunded in the same period a year ago.

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