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Abolishment of Paper Tax Discs

Paper tax discs are being abolished from 1st October 2014. What does this mean for the independent motor trade?

Abolishing the paper tax disc

It was announced by the Chancellor George Osborne in his 2013 Autumn statement, that from 1 October 2014, the paper tax disc is to be abolished and vehicles displaying tax discs with any months left to run after this date can be removed from the vehicle windscreen and destroyed as the Government moves to an electronic system. To drive or keep a vehicle on the road individuals and organisations that own a motor vehicle (cars, vans, motorcycles, buses, heavy goods vehicles, etc.) will still need to get vehicle tax even if the vehicle is exempt (e.g. historic tax class) and the DVLA will still issue renewal reminders when the tax is due to expire.

The Police and the DVLA now rely on Automatic Number Plate Recognition (ANPR) camera technology and an electronic vehicle register to support enforcement and compliance, making paper tax discs redundant. These changes have resulted in cost savings for the Government, businesses and taxpayers as well as reduced administrative burdens.

Key elements of the new legislation

With the new legislation come a number of key changes that the motorist and motor trader must be aware of. These include:

  1. When buying a vehicle the vehicle tax will no longer be transferred with the vehicle and will need to be taxed by the new keeper before the vehicle can be used.

  2. When selling a vehicle, provided the DVLA are notified they will provide a refund for any full calendar months left on the vehicle tax. A separate application for any refund is no longer required and the DVLA will automatically issue a refund when a notification is received from the person named on the DVLA vehicle register that the:

  • vehicle has been sold or transferred
  • vehicle has been scrapped at an Automatic Treatment Facility 
  • vehicle has been exported
  • vehicle has been removed from the road and the person on the vehicle register has made a Statutory Off Road Notification (SORN)
  • person on the vehicle register has changed the tax class on the vehicle to an exempt duty tax class

Impact to Motor Traders:

The impact of these changes to motor traders will be relatively negligible but there are a couple of points to note:

  1. Vehicles acquired by motor traders, including part exchanges with un-expired tax discs cannot be used on the road as the tax disc is nontransferrable and as such will end when the vehicle is sold. Motor traders may wish to use trade plates, provided that the vehicle is used within the conditions for use of trade plates. Alternatively, if the vehicle is to be registered in the name of the motor trader, then new vehicle tax will need to be obtained immediately prior to use of the vehicle – there are no days of grace.

  2. Trade plate licenses are unaffected and motor traders will still need to apply and pay for a new trade licence at the time of renewal.

Vehicle sales risks:

All motor trade risks involved in the sale of vehicles should now be in possession of a set of trade plates in order to facilitate the use of such vehicles during collection, testing or delivery.

Where you allow prospective purchasers to test drive vehicles you must have accompanied demonstration use included on your schedule and a driver named on your certificate of motor insurance with motor trade business use must accompany the prospective purchaser at all times. To avoid demonstrating an un-taxed vehicle the purchasing and use of a trade plate is recommended. 

Motor vehicle servicing and repair risks:

Motor traders will need to check online with the DVLA at https://www.gov.uk/check-vehicle-tax that customers vehicles’ in for servicing or repair that will be driven by them, are taxed or have customers sign a confirmation that the vehicle is taxed or use trade plates before any road testing on the public highway. It is an offence to drive an untaxed vehicle on the road and the penalties will apply to the driver and (if applicable) the company Director for allowing this to happen, so it will be important that motor traders have sufficiently robust controls in place to deal with this going forward.

Motor Insurance Database (MID):

Although these proposed changes to Vehicle Excise and Registration Act 1994 (VERA) do not directly impact the MID it is worth highlighting the underlying requirements of the MID which will serve as a timely reminder especially also considering the fact that any unexpired vehicle tax can no longer be transferred with a vehicle at the point of sale which will create an even greater emphasis on MID management compliance by policyholders.

It is a condition of your policy that you must promptly supply details of all licenced insured vehicles or trade plates to be insured on your policy and advise us when any licenced insured vehicles are sold or disposed of to meet your legal obligation as required by the relevant law applicable in Great Britain and Northern Ireland for entry on to the Motor Insurance Database (MID). Failure to meet this obligation could mean that we refuse to deal with any claim or cancel your policy. 

Vehicles that need to be notified by you to meet your MID obligations are::

  • All permanent vehicles registered to, owned by or leased to the motor trade policyholder;

  • All trade plates licensed to the policyholder;

  • Customer’s vehicles in the custody or control of the policyholder for morethan 14 days;

Vehicles that do not need to be notified are:

  • Untaxed stock vehicles (i.e. such as those driven on trades plates for accompanied demonstration purposes and not used for any other purpose). 

If you would like any further assistance or guidance with regards to these changes, please do not hesitate to contact us.


Jackie Wright
The DVLA were recently asked in their Q&A forum what happens If a motor trader purchases a car after 1st October 2014 – and they want to tax it. In their answer, the DVLA say they expect vehicles disposed into the motor trade to be untaxed and used on trade plates whilst in the temporary possession of the trader. If the trader wishes to tax vehicles for personal use, then vehicles should be registered and taxed accordingly.

You can see the text of a Q&A session the DVLA hosted online here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/350422/Vehicle_tax_changes_webchat_transcript.pdf
21/10/2014 13:47:11
Tony mills
Can a motor trader still tax a car on the green slip with out a change of keeper
05/10/2014 12:10:47

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