Ghost Tax Costing Drivers Millions

Drivers are losing out over £40 million year as a result of changes to the way road tax is collected.

The reforms that came into effect last autumn meant the end of the tax disc since motorists are no longer obliged to carry proof of taxation on their windscreens. It is the DVLA’s new policy of automatically cancelling any remaining VED when a car is registered to a new owner that is proving to be the most significant change.

Under the old system, when a vehicle changed hands the new owner would be allowed to benefit from any outstanding tax. Cars were often sold second-hand on the basis they were taxed until October, for example, adding to their value.

Since 1 October 2014, however, sellers automatically have any full months’ tax refunded by the DVLA. Meanwhile, buyers are obliged to tax the vehicle from the start of the month in which it is purchased. This is the system that is resulting in the ghost tax because if, for example, a car is sold on the 10^th of the month in which its tax is due to run out, the seller gets no refund – and they will have lost around 20 days’ worth of VED. The buyer, on the other hand, will be forced to pay for 10 days of VED they do not need.

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