Scrapping of car tax discs leads almost a third of motorists to start paying monthly and spread cost
- More than 10 million motorists now using VED Direct Debit payments
- Option to pay car tax monthly introduced on 1 October 2014
- Monthly payments have a 5% surcharge over one-off annual lump fee
- Direct Debit has processed almost 54 million VED payments so far
More than 10 million drivers pay their car tax using Direct Debit since the DVLA introduced the payment method last year.
With approximately 25 million motorists on the road in the UK currently, almost a third have opted against the single lump fee or splitting payments over six months to tax their vehicle.
Almost two thirds of motorists said the ability to pay via Direct Debit gives them peace of mind that they won't forget to pay their car tax.
10 million motorists: Almost one in three UK drivers choose to use Direct Debit to pay for their car tax since it was made an option 12 months ago
The Government announced in Autumn Statement 2013 that from 1 October 2014 motorists will be able to pay their VED by direct debit, should they wish to do so.
The Direct Debit scheme has allowed motorists to pay their VED monthly as well as bi-annually or annually. The introduction has also meant a reduced administrative effort for motorists who can now have their licence renewed automatically.
At present, paying VED bi-annually attracts a surcharge of 10 per cent. Biannual and monthly payments made by direct debit include a five per cent surcharge, compared to the 10 per cent incurred previously when splitting the payment over six month periods.
Michael Chambers is Chief Executive Officer of Payment Schemes Limited (Bacs), the organisation behind Direct Debit in the UK, said: 'The option of paying for vehicle tax by Direct Debit has proved incredibly popular in its first year, even more so than we originally anticipated – so far, we've processed almost 54 million payments.
The Gov.uk site allows you to setup your Direct Debit payments for VED
'This is another demonstration of how Direct Debit remains relevant to today's bill payers and billers alike – just this year we processed 103 million transactions in a single day, a new record for us, and last year we processed more than 3.6 billion Direct Debits, another record.
'This continuing growth is borne out by our figures which show that 71 per cent of household bills are paid this way.'
Oliver Morley, Chief Executive of the DVLA, said: 'Direct Debit makes it easier than ever before for motorists to tax their vehicles and to spread their payments if they wish.'
Research conducted by Bacs found that 59 per cent of motorists admit that paying by Direct Debit would offer peace of mind, as there would be no worries about forgetting to make a payment, and over two-thirds (67 per cent) agreed that it would save them having to manually renew.
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