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Direct debit payments for vehicle tax proposed

Since 1 October 2014, tax discs are no longer used, and drivers can pay for their tax through direct debit.

Read our guide on these changes for more information.

Vehicle tax disc

The government is looking at introducing direct debit payments for vehicle tax to ease the financial burden on motorists.

With the rising cost of fuel and increased car insurance premiums, these are expensive times to be a motorist.

But hidden away in the last month’s Budget was a note about government plans to ease the financial burden on motorists – by introducing direct debit for vehicle tax.

Currently, it is only possible to buy a vehicle tax disc for six or 12 months.

And although, in many cases, buying two six-month tax discs costs more than buying a 12-month one, many motorists do so as they cannot afford the cost of paying for a whole year upfront.

Cash-strapped motorists

An exclusive poll by Confused.com has found that 26.3 per cent of motorists buy a six-month tax disc.

Two-thirds - 64 per cent - of those who do so admitted their main reason was because they simply couldn’t afford to pay a full year’s vehicle tax upfront.

And 64 per cent of those who buy a six-month tax disc said they would pay by monthly direct debit if given the option.

Direct debit reality

And such a move could soon become reality after Chancellor George Osborne outlined plans to introduce direct debit payments for vehicle tax, also known as vehicle excise duty (VED).

The Budget report says: “The government will consider whether to reform VED over the medium term to ensure that all motorists continue to make a fair contribution to the sustainability of the public finances, and to reflect continuing improvements in vehicle fuel efficiency.

“In addition, the government aims to develop a direct debit system to allow motorists to spread their VED payments.

“The government will seek the views of motoring groups on these measures.”

‘Early stages’

The DVLA, which administers the vehicle tax scheme, confirmed it is looking at providing a direct debit service.

But a spokesman added that the plans are in the “very early stages and we do not have specific details at this stage”.

Motoring organisations have welcomed the plans.

Andrew Howard, spokesman for the AA, says: “Being able to pay in instalments will help lower the burden on motorists’ finances.

And Jon Morgan, a consumer reporter at motoring magazine Auto Express, says: “Anything that gives motorists extra flexibility in how they pay their tax has got to be a good thing.”

What do you think?

Direct debit payments for vehicle tax – long overdue or not needed?

Perhaps you’re one of the 26 per cent of motorists who tax their vehicle six months at a time. Is a lack of money your reason for doing so?

Whether you buy a six- or 12-month tax disc, would you welcome the opportunity to spread the cost by paying in instalments by direct debit?

We want to hear from you! You can leave your thoughts on the message board below.

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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick covers all things consumer for Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.

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