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Drivers risk £80 fine as missed ‘road tax’ payments soar

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The number of drivers having their ‘road tax’ direct debit payments cancelled due to a lack of funds has soared, opening them up to an £80 fine or even having their car clamped or crushed.

In the months between April and December 2022, more than 720,000 drivers had their direct debits cancelled by the DVLA after payments couldn’t be taken due to a lack of funds.

The figures obtained by the RAC also revealed more than 950,000 had theirs cancelled during the 2021/22 financial year, a 9% increase on the previous year.

While this is a smaller number than the 1.1 million recorded in 2019/20, the RAC said if the current trend continues during the cost-of-living crisis, the numbers could surpass the previous high.

Direct debit payments for road tax

Drivers can pay vehicle tax by debit, credit card, or by direct debit. Currently, the most common way to pay is by monthly direct debit, with 86% of drivers choosing this method.

One in 10 pay annually, while less than 4% pay every six months.

The RAC said more people are choosing to pay by monthly direct debit – up 3% in two years – while those paying every six months has fall 9% in the same period.

“This perhaps demonstrates that more drivers are looking to spread their payments throughout the year to cope with big rises in household bill”, the RAC noted.

However, a missed payment or an unpaid direct debit results in the DVLA contacting the owner to inform them that it will try to take the payment again on a specific date.

If this fails, the mandate is cancelled which means the vehicle is not taxed. If it isn’t taxed and is used on the roads, it can lead to the DVLA taking enforcement action.

Fines, clamps and car crushing

RAC head of roads policy, Nicholas Lyes, said: “Spreading payments helps people budget when paying vehicle tax, so it’s very worrying that some are now struggling to do this.

“It’s important to realise that two consecutive failed direct debits from one bank account could lead to the DVLA removing that as a payment option.

“If drivers are struggling with payments, they should get in touch with the DVLA, particularly if the agency has already contacted them. Ignoring the problem carries an £80 fine, along with the outstanding tax. And those who don’t do this risk their vehicles being clamped or crushed.”

Lyes added that while spreading vehicle tax costs can be appealing from a budgeting point of view, “drivers should also be aware they will end up paying more if they choose monthly or six-monthly payments than they would if they paid in one go annually.”

Lyes also said recent RAC research revealed a “worrying trend” of drivers putting off repairs and cutting back on vehicle servicing because of household budget pressures.

“We are concerned the increase in the number of cancelled DVLA direct debits is part of a bigger picture of people struggling with the running costs of a vehicle”, he said.

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