Government could lose £119 million as more drivers dodge road tax

Lost revenue from road tax avoidance could be as high as £119 million this year, as the number of unlicensed vehicles in the UK soars. 

There are an estimated 719,000 untaxed vehicles (excluding motorcycles) in the UK, the equivalent of 1.8 per cent of all vehicles on the road, according to the latest Department for Transport (DfT) report. 

That is up from an estimated 634,000 vehicles (or 1.6 per cent) when the last data was published in 2019, and is not far behind 2017’s estimated 755,000 vehicles (or 1.9 per cent). 

Those figures are all significantly higher than before the DfT abolished the paper tax disc in 2014 and ended the process of transferring tax between vehicles. 

In 2013, prior to the changes, just 0.6 per cent of vehicles were untaxed. 

This year’s statistics are based on a roadside survey using automatic number plate recognition (ANPR) cameras at 267 sites in June and early July. 

More than a third (38 per cent) of the UK’s untaxed vehicles are 10 or more years old (similar to 2019’s 40 per cent), while the number of untaxed vehicles less than two years old is slightly fewer at nine per cent. 

More than half (55 per cent) of the vehicles have been unlicensed for two months or less. 

Jack Cousens, head of roads policy for the AA, said that the figures could have been higher given that hundreds of thousands of cars were granted a Statutory Off Road Notification (SORN) status during the Covid-19 lockdowns.

"Some of those vehicles will have been put back on the road with the owners either mistakenly or deliberately forgetting to tell the DVLA (Driver and Vehicle Licensing Agency)," he said. 

The penalties for not paying road tax are severe. Drivers could face a hefty fine and prosecution, and the DVLA has the right to clamp the vehicle until the correct amount of tax is paid. 

RAC head of roads policy Nicholas Lyes said that the increase in the number of unlicensed vehicles is “hugely concerning”. 

“While we’d like to think the abolition of the paper tax disc back in 2014 isn’t responsible, the fact remains evasion has increased significantly since then to the point where a shocking two in every 100 vehicles on the road aren’t taxed,” he said. 

“The cost from VED evasion in 2021 alone is set to be a whopping £119m, a substantial sum that should be spent on improving our road network. 

“We urge the DVLA to step up enforcement and to do all it can to bring evasion down, as it is clearly not fair on those who do pay their fair share to drive on the road.”

The DfT said that some of the estimated £119 million of potential revenue loss over one year will have been recovered by DVLA enforcement activity or by vehicle keepers paying arrears of VED at a later date. 

That means the ‘real loss’ to the Treasury is unlikely to be as high as £119 million and that figure is an 'upper estimate'. 

Julie Lennard, DVLA chief executive, said: “We work hard to drive down vehicle tax evasion and the vast majority of motorists are doing the right thing with over 98% of vehicles on the road taxed correctly. 

“Estimated evasion rates fluctuate and the pandemic is highly likely to have impacted some motorists’ behaviours. Those who choose to evade will be tackled using our proven package of comprehensive enforcement measures.

“These include penalties and court prosecutions through to the use of Automatic Number Plate Recognition cameras, wheelclamping and the removal of untaxed vehicles.

“You can tax your vehicle using our quick and easy online services – available 24/7 – and the costs of vehicle tax can be spread throughout the year by opting to pay in instalments by direct debit, which is a popular choice with nearly 15 million vehicles taxed this way in 2020.”