Vehicle excise duty revenue falls by £93m after abolition of paper tax disc

Revenue from vehicle excise duty (VED) fell by £93 million in the year after the abolition of the paper tax disc, official figures show.

The Driver and Vehicle Licensing Agency's (DVLA) annual report and accounts show that revenue from vehicle tax fell from £6.023 billion in 2014/15 to £5.930 billion the following year.

Motoring organisation the RAC described the figure as "a significant sum" that merits further investigation, amid fears that vehicle tax evasion has increased.

When the paper disc was ended in October 2014, the Government said it would eventually save the DVLA around £7 million a year.

A Department for Transport survey conducted in June last year revealed that the number of motorists failing to pay VED had more than doubled since the end of the paper disc.

The data showed that 1.4% of vehicles in use were unlicensed, which could cost about £80 million in potential lost revenue each year, although some of this will have been recovered through enforcement activity or payment by arrears.

The 2013 figure was 0.6%, costing £35 million.

RAC spokesman Simon Williams said: "While there are several factors which may have adversely contributed to a reduction in revenue - including unfamiliarity with the new system and greater numbers of cheaper to tax low carbon emission vehicles being taxed - we need to fully understand how great a part evasion plays.

"We therefore urge the Department for Transport to carry out another roadside survey of unlicensed vehicles this year to fully assess the untaxed vehicle situation.

"If this were to find that the number of untaxed vehicles is still at the same rate as when the last survey was conducted or, worse still, has increased, then action needs to be taken urgently to counter this."