Budget Report - March 2012
Changes to transport taxes in the Budget statement 2012
VED reform
This clause, on page 70 in the Budget "red book", is interesting as it mentions two issues with regard to reforms to VED under consideration by Government that would aim to:

"Ensure that all motorists continue to make a fair contribution to the sustainability of the public finances"
These clauses could have been drafted by Sir Humphrey as they are sufficiently vague that virtually anything could be covered as a VED reform by these two statements! The post 1st March 2011 scaled VED rates are based on the fuel type and official CO2 emissions for the vehicle, whereas the earlier vehicles, like MGBV8s and MG RV8s, have VED rates based simply on engine size. As pre 2001 cars are around 12% of the UK stock on the road, any upward adjustment of the VED rates intended to make a substantial contribution to the "sustainability of the public finances" would derive more revenue from the post 2001 cars than from an imposition on earlier vehicles. But the "fair contribution" aspect may involve judgements as to the other factors - for example the extent of the typical annual use of the cars and of the emissions of individual categories of car.

One of the concerns with the recent DfT consultation over the MOT test relaxation proposals for pre-1962 cars was the "unintended consequence risk" that if that measure were to be introduced it could lead to classic cars being seen as a special group over which special controls over their use or the imposition of taxes might be made. Let's hope this clause simply means "fair increases in VED" - for example increases in line with annual RPI - and that is all the Government has in mind.

"Reflect continuing improvements in fuel efficiency"
This may suggest the scaled VED rates for post 2001 cars may also be calculated to include an mpg factor, but that will need an "official mpg" figure to be established for each car.
VED tax disc display waiver
Clearly the Government, through the DVLA, is looking at ways of reducing costs and using second class mail or other low cost mailing services mean delivery times for tax discs purchased online (an option DVLA is promoting as convenient for both the driver and for the DVLA) could be extended. So the increased "non-display" period of a current tax disc on a vehicle is a natural measure to avoid difficulties where a driver has purchased a new tax disc online but it fails to arrive in time to avoid driving without a valid tax disc on display on the car.

Direct debit system for VED payments
This is an interesting sentence in Clause 2.148 above as we have seen VOSA (MOT testing body) has become quite clever with its commercial income generating initiatives - it offered a text reminder when the next MOT is due for a fee. So whilst a DD system offered by DVLA would spread the VED payment burden over the 12 months, we know that in the commercial world getting customers on to a DD means less future renewal delays or failures to pay. So the seemingly helpful DD system might be established with a cunning rollover VED renewal built in, unless positive action is taken by the account holder not to renew the VED.
In that case either the car will have been put on a SORN or alternatively the car would have been sold and DVLA notified by the seller of the new owner who would then be responsible to taxing the car or declaring a SORN - or notifying DVLA the car had been scrapped.

Posted: 210312




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