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Car tax evasion rate soars partly due to new tax rules

The Department for Transport has revealed new figures that show that the rate of untaxed vehicles has increased to 1.4% during 2015 from a figure of 0.6% in 2013.

560,000 unlicensed cars are estimated to currently be in use – this has resulted in losses of Vehicle Excise Duty (VED) of around £80 million a year. Enforcement action and the payment of arrears means that some of this will already have been recovered.

The increase in car tax evasion is most likely due to major alterations in the vehicle licensing system which occurred in October of last year, the department suggested. These new figures are the first to be released since this time.

The alterations mean that car owners no longer have to display valid tax discs – instead, online reminders are sent to motorists prompting them to pay their car tax. Drivers who choose to pay via direct debit have their licenses renewed automatically.

However, the new changes also mean that, instead of any remaining tax being transferred to a new owner with a vehicle once it is sold, any existing tax ends automatically once the vehicle changes ownership. Subsequently, the seller will be refunded tax for any full months that are outstanding.

The new owner will then be required to begin paying tax on the vehicle immediately.

Oliver Morley, chief executive of the DVLA, stated: ‘We write to every registered vehicle keeper in the UK to remind them when their tax is due and we have introduced a range of measures to make vehicle tax easy to pay. At the same time we are taking action against those who are determined to break the law’.