This piece first appeared in The Daily Telegraph on 12 June
The text here may not be identical to the published text
The Government is offering to repay nearly £40million to motorists who have paid too much road tax. The refunds are due following changes in the rate of Vehicle Excise Duty for smaller cars and an error made by the Driver and Vehicle Licensing Agency after the Budget in March this year.
Motoring organisations are warning that further mistakes are inevitable when cars are taxed on the basis of their emissions of carbon dioxide. From Autumn next year each model and variation of every new vehicle will be rated for how many grams of carbon dioxide it emits per hundred kilometres. The road tax will be fixed at a certain number of pence per grams of emission.
Final details have yet to be announced but Paul Watters (correct), Head of Roads and Transport Policy at the Automobile Association, says it could lead to more crime.
"It shows you exactly the trouble we are going to get when we get variable Vehicle Excise Duty. That's going to be a nightmare. We won't know if the vehicle system is millennium compliant until later in the year. The DVLA has been starved of investment and Graduated VED is the last thing they need. The Government is introducing a very complicated system that even the Government itself says may not influence car buying. An efficient DVLA is so important for crime and they are not going to have their eye on the ball if they are introducing a very complex tax they are ill-equipped to collect."
One and a half million owners of small cars are being invited to claim a refund on their Vehicle Excise Duty (car tax) worth up to £42. Although the Budget put up the rate of duty at once for cars from £150 to £155, a new lower rate of £100 was promised for cars with an engine capacity of 1100cc or less. This new rate - Graduated Vehicle Excise Duty - applies from June 1 and anyone who taxed a small car in July 1998 or later will get a refund if they claim it.
Owners of cars which qualify for the new rate of tax, should have received a form V901 inviting them to re-license their vehicle at the new rate from June 1 and claim the refund for the months which have been overpaid. But there is a catch. The form has a big circle with the invitation "Please attach your current licence here - use glue do NOT staple". But under it is a warning that "it is an offence to use or keep a vehicle on a public road without a valid licence". By taking the disc off the car - even for the short time needed to re-license it - an offence could be committed if the car is left on the road. A spokesman for the DVLA said
"police will exercise their discretion and check with the DVLA database and not prosecute while people are using V901 to claim a refund."
Normally, a refund is only given for each whole month of a tax disc that has not expired. But the DVLA is giving what it calls a 'concession' just for the month of June. Anyone using V901 to cash in their old tax disc in June and renewing at the new rate of duty will be given a refund for June - normally they could only get a refund for unexpired months from July. Someone who taxed their car in November 1998 paying £150 will be able claim a refund of the five unused months June to October and set that £62.50 off against the £100 cost of re-licensing from June 1 at the new lower rate. Someone who bought a tax disc in April will do even better. The refund - at the post-Budget level of £12.91 a month - will come to £129.10 which is more than the new £100 tax. So they will get a tax disc for a year and £29.10 in cash from the Post Office. That concession applies until June 30.
Anyone who waits until July 1 will only get a refund of eight months from August onwards, £3.20 in cash and a twelve month licence from July 1. But reader Mr Peter Lidbetter does not see it as a concession. He went to re-license his wife Edna's Nissan Micra.
"They hyped it up but my wife paid a year's duty from February 1, eight months left, she gets £100 which covers her disc for another year, nothing more to pay. I thought she got June free but no, she still has to pay that. Without this so-called concession she would have to pay twice in June!"
The Automobile Association warns that many owners of small cars will be disappointed. Cars that are called '1100' could have a capacity up to 1149cc. But any vehicle with a capacity of 1101cc and above will have to pay the full tax of £155.
Up to fifty thousand motorcycle owners will eventually be repaid £5 each following a mistake in the rate of road tax charged since the day after the Budget this year. The DVLA notice issued by the Treasury on Budget Day stated that the tax on motorcycles of 250cc or more would now be £65 a year. The new rate was charged to anyone renewing a motorcycle licence from March 10 1999. But the civil servants at the DVLA had got it wrong. The tax on motorcycles was not changed in the Budget - it should have stayed at £60. Although the mistake was spotted within weeks, the Agency decided to wait another two months before telling anyone and arranging refunds. A spokesman told Money Go Round.
"We had to identify the extent of the error and determine the fairest and most efficient way of rectifying it and repaying those vehicle keepers who have been overcharged. In addition, a time slot for the necessary changes to our computer systems had to be found alongside our ongoing programme of systems changes."
Anyone who taxed a motorbike over 250cc or a motor-tricycle over 150cc between March 10 and May 31 was charged £5 too much and should be sent a refund automatically. Exactly when is not clear. A spokesman said "in the next few weeks" but confirmed that no interest or compensation would be paid.
Finally, disappointment for people with vehicles which are now in their early twenties and who remember vaguely that car tax is free once the vehicle reaches 25. This concession was introduced in November 1995. But Gordon Brown changed it in his March 1998 Budget. Since then, only 'historical' vehicles constructed before January 1 1973 qualify for free road tax. That date will not change.
The DVLA Customer Enquiry Unit is on 01792 772134.
12 June 1999