Scrapping the paper tax disc has left the DVLA scrabbling for a solution to the problem of what to do once a bike is sold with remaining tax on it; something no one appears to have thought about before announcing the end of the current system.
Moves to scrap the 93-year-old vehicle tax disc in October this year have thrown up some issues which the Driver and Vehicle Licencing Authority (DVLA) has yet to solve and is still working on at the moment.
As of October 2014, vehicles will no longer have to display a paper tax disc as the system is being replaced with an electronic system – a bonus to motorcycles which were prone to theft of the tax discs.
However, it’s now become clear the tax belongs to the person, not the vehicle, so you won’t be able to sell a bike with tax remaining on it as you currently can. If you sell a bike you will be eligible for a refund on outstanding tax once the bike has been sold to someone else through the DVLA and it’s possible it can be transferred to another vehicle.
This creates another problem though. Once the bike is sold to someone else (or traded in at a dealer), it’s no longer taxed and therefore not legally allowed to be ridden on the road after the sale and not technically insured until the new owner pays to tax it.
The DVLA is now looking at ways of getting around this issue where new owners will be allowed a short grace period to allow the electronic insurance system to register the change of ownership and the new owner to be able to tax the bike and make it legal again.
The DVLA is also working on what to do about the non-whole months left on tax discs because unless is can all be transferred to the next vehicle, owners will lose out on tax bought and the government is set to earn millions of pounds of extra revenue each year.
DVLA spokesperson Karen Powell told MCN: “DVLA officials are working through the details at the moment and as soon as there is an answer we will let everyone know.”
The draft legislation states: “It will no longer be possible to transfer the benefit of a vehicle licence when there is a change of registered keeper. As a consequence of this, where there is a new registered keeper he/she will be obliged to take out a new vehicle licence when the vehicle to which the vehicle licence relates is transferred to him/her.
The reason for now preventing vehicle licences being transferred from registered keeper to registered keeper is to avoid a new registered keeper unknowingly keeping an unlicensed vehicle. For example, in the absence of a paper licence a vehicle may be purchased supposedly with the benefit of a vehicle licence. The new keeper would believe that the vehicle was licensed, but the former keeper could apply for a refund of VED without the knowledge of the new keeper resulting on the new keeper having an unlicensed vehicle.”
The tax disc was introduced in 1921 but the advent of new technology used by the DVLA and police can show instantly if a vehicle is taxed thanks to an electronic register.
The ditching of the tax disc is a welcome relief to motorcyclists as they have always been something at risk of being stolen from parked bikes and have been a particular pain to fit to many bikes and still remain legal.
The new system will allow people to pay in monthly direct debits rather than the current six months or yearly payments. The extra charge for six monthly payments will be reduced from 10% to 5% with the same extra charge for paying monthly.
Vehicle tax was brought in for the1888 budget and was first applied to vehicles in the 1920 Roads Act. The first tax disc appeared in 1921.