Vehicle tax won’t transfer to new owner

Proposals to kill off paper tax disc will mean vehicle tax is non-transferrable from October 2014.

It seems the death of the paper tax disc that has been in use for 93 years will have one unexpected consequence: when a vehicle changes ownership, the tax attached to that car will be non-transferrable.

In the past the new owner of a vehicle would inherit the remaining time left until the Vehicle Excise Duty (VED) expiry date. Now when ownership changes the new owner will have to tax it immediately, according to the Draft Clauses and Explanatory Notes for the proposed Finance Bill 2014.

The Finance Bill 2014 states: “…it will no longer be possible to transfer the benefit of a vehicle licence when there is a change of registered keeper. As a consequence of this, where there is a new registered keeper he/she will be obliged to take out a new vehicle licence when the vehicle to which the vehicle licence relates is transferred to him/her.

“The reason for now preventing vehicle licences being transferred from registered keeper to registered keeper is to avoid a new registered keeper unknowingly keeping an unlicensed vehicle. For example, in the absence of a paper licence a vehicle may be purchased supposedly with the benefit of a vehicle licence. The new keeper would believe that the vehicle was licensed, but the former keeper could apply for a refund of VED without the knowledge of the new keeper resulting on the new keeper having an unlicensed vehicle.”

Basically the new system will stop the old owner from selling a vehicle with tax, only to later apply for a refund, which could see the new owner punished.

Besides protecting drivers, the government is likely to rake in a few quid from not having to offer refunds on vehicle tax. The current system allows a driver to be refunded for the number of complete remaining months until the expiry date.

Applying for vehicle tax will be done online when the changes come into effect from October 2014. The government says the new system will save £7million in administration fees.