VED road taxFrom 1 October 2014, the paper tax disc will disappear, replaced by online records – and this could have serious implications for government finances, warns the RAC.

A new survey conducted by the motoring organisation suggests that the number of people failing to tax their car in the future could reach that of uninsured motorists.

If the same number of drivers failing to tax their cars reaches that without insurance – estimated to be around one million in the UK, according to the Motor Insurers’ Bureau – it could cost Westminster more than £167 million.

Current figures put the number of untaxed vehicles on the UK’s roads at just 210,000 of the 39.1 million active vehicles, which still equates to £35 million in lost revenue for the exchequer.

But the estimated loss according to the RAC could be as much as 16 times the £10 million saving the new taxation system will bring.

The RAC’s data highlighted that 33% of motorists in Britain were completely unaware that the paper tax disc is to be abolished, while half of all drivers in the UK were unsure of when the changes were due to come in.

DVLA: ‘no basis’ to figures

Countering the claims that the new Vehicle Excise Duty records would lead to lost revenue to government coffers, the Driver and Vehicle Licensing Agency insisted the new regime would work: “There is absolutely no basis to these figures and it is nonsense to suggest that getting rid of the tax disc will lead to an increase in vehicle tax evasion.”

RAC chief engineer David Bizley countered the DVLA’s claims by saying, “There is clearly concern among those motorists that we surveyed over the issue of enforcement.

“Most of the changes make sense and will benefit the motorist, but too many motorists are unaware of the detail and the big question has to be whether enforcement using only cameras and Automatic Number Plate Recognition will be sufficiently effective.”

The new system will be enforced by Automatic Number Plate Recognition cameras that can cross-reference a vehicle’s registration plate against a central database to determine if the car is taxed or not.

Drivers who haven’t taxed their car online or at a Post Office could be liable to a maximum £1,000 fine.

Remember, if you’re buying a car after 1 October 2014, the vehicle’s tax is not transferable, so you’ll have to buy your own road tax, too.

If you’re selling a vehicle after this date, you’ll be able to get a refund based on a sliding scale of the time your car tax has to run.