Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what estimate he has made of the amount that will be saved by the non-issuing of vehicle excise discs.

It has been a long standing feature that Vehicle Excise Duty licences are issued from the first day of each month. Licensing on a date other than the first of the month would add administrative complexity and cost to the tax system.

As a consequence of the abolition of the tax disc, from 1 October 2014 there will be around 2.5 million motorists that will now receive automatic refunds upon selling their vehicle that would not have done so previously. The Tax Information and Impact Note published on 10 December 2013 estimated that the abolition of the tax disc would have no Exchequer revenue impact. We expect the revenue impact of the introduction of automatic refunds and the non-transferability of the vehicle licence to cancel each other out.

The administrative cost savings from the abolition of the tax disc are estimated to be £13.8m per year as set out in the Impact Assessment published by the Driver and Vehicle Licensing Agency (DVLA) on 8 September 2014. These savings reflect the costs associated with producing, issuing and posting the tax disc.