£94 million being lost due to road tax evasion

Published 21 November 2019

An estimated £94 million is being lost due to VED road tax avoidance, according to a new report by the Department for Transport (DfT). 

There are an estimated 634,000 untaxed cars and vans in the UK, a figure that equates to 1.6 per cent of all vehicles on the road. The statistics are based on the DfT observing registration marks of vehicles at 256 sites across the UK in June 2019.

Despite the huge shortfall, the DfT says the number of untaxed vehicles in the UK is improving - its previous report in 2017 estimated that 1.9 per cent (755,000 vehicles) were on the road without any form of vehicle excise duty.

Around 40 per cent of the UK's untaxed vehicles are 10 or more years old. One in 10 are less than two years old, while more than half (54 per cent) have been untaxed for two months or less.

The DfT scrapped the paper tax disc in 2014 and ended the process of transferring tax between vehicles. Since then any existing tax automatically ends when the vehicle changes hands with the previous keeper being refunded any full months of remaining tax. It's the responsibility of the new keeper to tax the vehicle immediately or face a maximum fine of £1000.

Tax -disc

Since scrapping the tax disc, the estimated VED evasion rate jumped from 0.6 per cent in 2013 to 1.8 per cent in 2017. The DfT says the figure for 2019 (1.6 per cent) is a ‘statistically significant'.

Simon Williams of the RAC said the higher evasion rate made it hard see the benefits of abolishing the paper tax disc.

“While it is good news that vehicle tax evasion has gone down, it is still significantly higher than it was before the tax disc was abolished in October 2014,” said Williams.

“This all means the Government is consistently missing out on very large amounts of tax revenue which from next year will be ringfenced for maintaining major roads in England. This time around the lost revenue figure is potentially as much as £94m.”

The DfT claims the real loss of duty to the Exchequer may not be as high as £94 million, as this is an upper estimate and some will be reclaimed by enforcement or paid in arrears.  

Comments

hissingsid    on 21 November 2019

The answer has been staring governments in the face for decades.
Abolish VED and put the tax entirely on fuel, so that those who use the most pay the most.
Anyone can take a chance and avoid paying VED, but everyone has to pay at the pump.

skippy41    on 21 November 2019

Add 1p to fuel simple, they would make a profit every year the extra money could be used to actually fix the roads

Edited by skippy41 on 21/11/2019 at 18:58

rusic    on 21 November 2019

A key problem with abolishing VED is that it's currently used as a mechanism to encourage people to own vehicles which produce less pollution. A small tax increase on fuel wouldn't have the same effect.

Although they probably should increase the tax anyway, and then spend the extra on maintaining roads properly, and the development of better green transport technology.

DeadBat    on 21 November 2019

Less polluting cars in vast majority are more economical and use less fuel (unless you drag race in Prius) therefore scrapping VED and adding 1-2p to the fuel price make sense.

Zeus B    on 22 November 2019

This could be easily resolved by adding a pollution related purchase tax to the price of every new vehicle sold.

Engineer Andy    on 23 November 2019

A key problem with abolishing VED is that it's currently used as a mechanism to encourage people to own vehicles which produce less pollution. A small tax increase on fuel wouldn't have the same effect. Although they probably should increase the tax anyway, and then spend the extra on maintaining roads properly, and the development of better green transport technology.

The problem with the argument that VED encourages people to change to less polluting vehicles is relatively ineffective, because most who can afford to do so won't care either way because they can afford the extra VED (and fuel costs), those who cannot afford to change (poorer people running older, more polluting cars) simply cannot afford to shell out several £0000s on a second hand car every 5 years to save maybe £100pa on VED and about the same on fuel.

Also doing so forces poorer people out of their cars and onto (ever more crowded) public transport, giving them less social mobility and widening the difference between them and those more wealthy in society.

It also encourages people without the means to pay the cost of a new car back in one go to buy on credit (especially PCP deals on rates far higher than standard bank loans), which makes the situation FAR worse, often trapping them in a vicious cycle of ever-increasing debt.

Putting the cost on fuel would mean no VED avoidance, no collection/enforcement costs for both car retailers, citizens and government, so more money to spend on other things of importance, including road repairs. It's one of the biggest parts of the argument for simplifying the tax system generally - less bureaucracy, so more money goes to other good causes or we keep more in our pockets to spend on what WE want.

M C Harvey    on 25 November 2019

Engineer Andy,

Totally agree with you!

gavsmit    on 21 November 2019

The thousands of criminals driving round without paying VED are getting away with it because they have false/cloned number plates on their cars so are immune from the over reliance on automated road law enforcement (not to mention all the other automated penalties like speed, bus lane and parking they are getting away with as well, much to the distress of the poor person who actually owns the car with those plates).

It doesn't take long to look for a similar car somewhere on the internet then clone that car's number plate.

So the only solution, whilst useless politicians and idiotic councils encourage this kind of criminal behaviour with their short sighted stupidity, and frustrate decent people, would appear to be to ring-fence an additional few pence on fuel instead of having VED.

bluelionman    on 23 November 2019

I'VE JUST BOUGHT A CAR - second hand off my brother after not driving for years and wondering if I done the right thing as costs will go up so much for me wondering if sticking to public transport would of been better as I got used to it - just sucks its not 24 hours most places.

Also when I last drove it was Road Tax Disc and paying in the post office or online - don't like this new business it don't transfer with a vehicle used to be good split the dates up when MOT, Insurance and Tax was due. I'm going away travelling to so don't want tax and insure till after Xmas so got to SORN to then but think log book might come when I'm away so that's worrying unless I can SORN without it while away or now before I even get V5?

Also sucks when I gave up driving - due to ever increasing cost and no where to park time I get home at night - I had 100% no claims discount and now have to start all over again. Not because of bad driving or accidents but because I simply not driven for some years. :-(

Edited by bluelionman on 23/11/2019 at 01:15

hissingsid    on 23 November 2019

For those of us who live in rural areas, public transport is not an option.
In my village there is a bus into town every two hours, but none to get home after 5.00pm, so even though I have a free bus pass I rarely use it.

Marcus T.    on 27 November 2019

We have the same problem. Our small town has no railway station and the next nearest train station is half an hours drive.We can only get a bus from our town to the two nearest towns. Neither my Wife or I work in those towns,so we have to drive everywhere. There is less public transport round my way now than in the past, and I can't see that changing anytime soon.

RafflesNH    on 25 November 2019

"An estimate [sic] £94 million is being lost due to VED road tax avoidance..." 'Avoidance'? I think the title used the correct word. As in Tax matters, avoidance is legal, but evasion isn't.

Edited by RafflesNH on 25/11/2019 at 13:50

Model Flyer    on 25 November 2019

Adding the VED to fuel is not a Vote winner as many drivers will disagree with it and other things at the polling booth among other things, and the amount added to fuel would undoubtedly be far higher than needed. Adding it to fuel would IMO also increase the number of unregistered and probably uninsured vehicles that already cause chaos to thousands of honest motorists every year . We need far more police on the roads who can dish out far more punitive fines or seize the car without tonnes of paperwork to complete . Its a free for all at the moment for any dishonest driver .

BOB 1    on 25 November 2019

Bring back the tax disc, also a insurance windscreen sticker and an MOT sticker when that is due.
I have reported untaxed cars, no MOT and no insurance, and nothing is done, even when caught they get a small fine and slap on the wrist!!

Jo Puttick    on 25 November 2019

Having fuel taxed an extra amount for VED would also benefit those of us lucky enough to own several cars and whose annual mileage is spread between them.

Arthur Gardiner    on 25 November 2019

I think the arguments for putting tax on fuel are pretty sound.
However, I met a cashier at a fuel station recently who talked about the disgusting people who do 'drive-offs', with cars that display false number plates. Could there be a danger of this practice increasing, which in turn might force the petrol companies to increase their prices further to compensate for their loss, if VED is scrapped?
I'm not saying it would, but is there another way of catching these criminals, short of ramming their car in the exit lane, or engaging in a high speed chase, if spotted?!

Michael Tobin-Hill    on 25 November 2019

Which bright spark thought this idea was a vote winner.?

aethelwulf    on 25 November 2019

Adding tax t fuel to abolish VED would be not in the motorists' favor. Within a very short time a Chancellor would come along and re-introduce VED on some pretext - climate/potholes/disabled/you mention it and the tax on fuel would not come down.You would pay twice and be worse off. No ,leave it as it is and have more ANPR cameras on every road checking number plates with rapid reaction patrols to catch up with teh miscreants. Some of whom may live in camps of course and be criminals that live outside the law generally and it would be good to catch those types.

   on 25 November 2019

If your car isn't taxed, that automatically makes your insurance invalid, doesn't it.?

Cloverleaf4    on 26 November 2019

Arthur Gardiner makes a good point about 'drive offs'. The problem is whatever we do the hard core persistent criminals will simply come up with something else. There is keyless entry for cars and cash machines on the High Street but there are also criminals who can easily get hold of equipment to steal your car when your keys are inside the house or steal your money just by hovering near you when you withdraw cash. When these types of people are caught they should be severely punished instead of the usual 2 year suspended sentence. Saw a programme recently where police tracked a foreign gang coming into the country and literally stealing thousands of pounds from cash machine fraud and after a massive time consuming operation ended up getting a few months in jail. They say prisons are over crowded but if we are a nation of criminals perhaps Persimmon should build a load of shoddy prisons instead of houses! Tax on fuel instead of car tax has been muted for many years but whatever happens the criminals will I'm sure be one step ahead.

hissingsid    on 26 November 2019

I take the point about "drive offs", but the the tax on unpaid fuel is a fraction of the amount lost on unpaid VED. That raises another point. Who pays the tax on fuel dispensed but not paid for? Has it already been paid when the retailer purchases the fuel from the distributor? If so, there is no tax lost to the exchequer.

A possible but expensive measure to prevent "drive offs" would be to install ANPR operated barriers at forecourt exits, just as has been done at many car parks. No payment, no exit.

Obviously there would have to be more than one exit barrier, so that the law abiding customers could leave whilst the thief was stuck awaiting the arrival of the police.

Edited by hissingsid on 26/11/2019 at 10:01

Greenleader    on 27 November 2019

No VED and tax fuel, sensible. So why does the government not take notice of peoples comments. But then our Tax system has needed a complete overhaul for decades now! No one should be allowed to enter politics without a test to prove they can think laterally and they should also be prepared to ask the question : "What if ?"

The_Rev    on 28 November 2019

you make a good point except that I think that of every £1.30 for a litre they are already taking 50% tax

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