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Tax disc scrappage causes over £200m slump in revenue

AOL Cars UK logo AOL Cars UK 09/06/2016 Jack Evans
© Provided by AOL Cars UK

The scrapping of tax discs in 2014 has caused a slump of more than £200 million in revenue, a Freedom of Information request has revealed.

The switch to a fully online system initially cost £1 million, and the government financial watchdog was adamant that there would be no "material increase in lost revenue."

However, findings have shown that £2.7 billion of vehicle excise duty was collected between October 2014 and March 2015 – nearly £223 million lower than what was brought in during the same period a year earlier.

Paper discs were introduced in 1921 but were replaced in 2014 by an online-based system to make the process of taxing a vehicle easier and hassle-free.


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Full figures regarding the amount of revenue brought in through VED for the year leading up to March 2016 are expected to be made public after the upcoming EU referendum on June 23.

Oliver Morley, DVLA chief executive, said: "Almost 99 per cent of all vehicles on the road are correctly taxed: that's around £6bn in vehicle tax passed to the Treasury every year.

"We write to every registered 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."

The National Audit Office said that the change of system "has likely contributed to an initial increase in reported levels of non-payment, which has led to additional compliance and enforcement activity."


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