Vehicle tax to become nontransferable

Posted: 20 Jan 2014

No transferrable tax

In December, we brought you news of plans to scrap paper tax-discs in a bid to move everything to an automated online system. The proposal, which was largely welcomed, also includes plans to enable motorists to pay their VED in monthly instalments via direct debit as well as the current six and twelve month payment options.

However the move is not without controversy, as it has since been revealed the change would mean motorists could no longer sell a vehicle as taxed. Currently, should your bike have tax remaining when you sell it, this is transferred to the new owner as the VED pertains to the bike. Under new proposals, VED would belong to the owner (much like insurance) and should the owner sell the bike with tax remaining, they would be entitled to a refund of the remaining duty paid and the new owner would be responsible for obtaining their own VED.

The reason behind this is allegedly to protect buyers from being misled about a vehicles tax status, given there will be no paper disc to check. Overall the changes, which are to come into force in October this year, will save the treasury in excess of £7 million a year.

The relevant section of the bill reads:

“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.”

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