The future of VED and how it can affect you

The future of VED and how it can affect you

24 June 2014 Concept Car

Have you paid your VED (Vehicle Excise Duty) recently? Do you remember when it is due to expire? You are not seriously going out to check it on your car’s windscreen, are you?

Believe it or not, you are not the first and won’t be the last person to actually forget paying the VED on time. There are simply too many payments one needs to remember these days. Ideally you set-up a direct debit from your account and safely forget about it but this is not the case with paying the VED. Currently, if you need to renew the VED you would need to fill-out a paper form and visit the Post Office to make the payment and then wait for your tax-disc to arrive. All this hustle and paperwork has left you with a feeling that the system is stuck in the last century.

Vehicle Excise Duty or commonly known VED in it’s form is in regular use for about 93 years and since then not many things have changed. The feeling of “last century” is probably not so much exaggerated after all. However, recent changes announced by the government on December 5th 2013 promised to streamline and modernise the system.

From October 1st 2014 all motorist would be able to pay VED by direct debit which would streamline the process. In the past it was possible to pay the VED in twelve or six month based instalments and the latest involved high administrative costs in addition to the unnecessary paper waste. While talking about paper waste, the new measure abolishes also the usage of tax-discs and any checks by police would be made by Automatic Number Plate Readers which are connected to the central data base. Now let us dive into the details.

Paying for VED: New vs. old method

The old method allowed motorists to choose whether they pay VED in twelve or six month instalments. The six month installment usually incurred in 10% extra administrative costs. According to the new measure the administrative costs for six month instalments is expected to be only 5%. This might seem insignificant but according to the recent estimates motorist could save £20 million a year thanks to the move, with businesses saving £7 million in admin costs.

Next big change in the law is that drivers will also be able to pay VED by monthly direct debit transactions for the first time. Instead of facing big payments in one go they can spread the payment throughout the year. The down side is that there will be a small administrative fee of 5% for monthly payments.

No more tax-discs

Some drivers are probably too attached to those paper tax-discs and have that feeling of security when it is attached to their car’s windscreen. From the regular driver’s point of view this change would not make a big difference, that is assuming that they were paying the VED. With this new measure motorists would be able to make their payments easier using a direct debit.

This new change left some motorists with an uneasy feeling. They expect that when the electronic databases fails they would be unable to prove the police officer that VED is paid without that paper tax-disc. Some motorists suggest that with the tax-disc abolishment number of tax evaders would rise.

These are all legitimate concerns but the fact is that most of the tax evaders are caught using Automatic Number Plate Readers which check your number plate and the status of your VED instantly, rather than someone actually trying to read your tax-disc on your windscreen. It is estimated that around 800,000 people were caught without paying last year.

Buying or Selling your car: What to expect?

The new measure on VED makes things relatively straightforward for buying or selling a car. One thing to remember though: The car VED is not transferable.

Selling your car

If you are planning to sell your car and want to use your paid VED as a bargaining point then you better sell your car before this new measure goes into effect, because your paid VED is not going to be transferred with the car. If you sell your car after 1st of October 2014 and notify the DVLA (Driver and Vehicle Licensing Agency), you will automatically get a refund for any full calendar months left on the vehicle tax. It is not necessary to make a separate application for a refund of vehicle tax.

Buying a car

If you are planning to buy a car and would like to have that extra detail of paid VED then you better do that now before this new measure goes into effect. If you are not sure from where to start we suggest you visit our online used car showroom now!

From 1st of October 2014, when you buy a vehicle, the VED will no longer be transferred with it. You will need to get a new vehicle tax before you can use the vehicle. There are several ways to obtain your VED according to the DVLA:

  • You can tax the vehicle using the New Keeper Supplement (V5C/2) part of the vehicle registration certificate (V5C) online or by phone – 24 hours a day, 7 days a week.
  • Alternatively, you may wish to visit a Post Office branch.

At Concept Car Credit we will provide a new vehicle supplement for every vehicle we sell. In addition, we would be more than happy to help our customers to make the applications at our offices.

24 June 2014 Concept Car