The Chancellor, George Osborne, is expected to announce in his Autumn Statement today (December 5) that the Vehicle Excise Disc (VED), which must be displayed by law in motor vehicles, is to be scrapped and replaced with an electronic system from next year.
A vehicle tax was introduced in the 1888 Budget, with the disc having to be displayed coming into law in 1921, but it is no longer needed for enforcement purposes as the Driving and Vehicle Licensing Agency (DVLA) and the police now rely on an electronic register to find out whether a vehicle has been taxed or not. In fact, according to the Treasury, the number of visual notifications by the police of unpaid tax has fallen by 75 per cent since 2008.
If the changes go through as planned in next year’s Finance Bill, motorists will be able to pay for the VED by monthly direct debit, although this will cost an extra 5 per cent, or for six months at a time, which currently costs an extra 10 per cent but is expected to be reduced to 5 per cent too, and the two measures are expected to save motorists who spread their payments, over £20 million a year.
Scrapping the tax disc is also expected to save businesses a total of £7m a year in administration costs, but customers who are not online will still be able to tax their car in person at a Post Office or on the ‘phone.
A Treasury spokesman said that the move is a visual symbol of how ministers are moving government into the modern age and making dealing with government “more hassle free”.