A brand new examine has revealed that just about 3 million UK motorists are overpaying for his or her automotive tax every year – not by way of selection, however merely by way of lack of know-how.
In keeping with analysis by Go.Examine Automobile Insurance coverage, an estimated 2.9 million drivers are shedding out financially by paying their Automobile Excise Responsibility (VED) in month-to-month instalments – with out realising that this methodology consists of an automated 5% surcharge.
Whereas the choice to unfold funds by way of direct debit is fashionable for its comfort, notably amongst youthful or much less financially safe drivers, this added price is catching many individuals out. The truth is, 39% of motorists surveyed admitted they didn’t know there was an additional payment for paying month-to-month, with a staggering £56.3 million in extra funds made every year consequently.
Of those that presently pay by month-to-month direct debit, practically half (49%) mentioned they might have paid in a different way if that they had been conscious of the surcharge. That equates to £27.5 million in avoidable prices yearly, with many drivers doubtlessly paying lots of extra over the lifetime of their car possession.
For instance, somebody paying £1,000 yearly in VED by month-to-month instalments would incur an additional £50 every year – or £250 over 5 years. And for drivers of automobiles with increased emissions and tax charges, the losses might be even better.
The surcharge solely applies to drivers who select to pay month-to-month or each six months. Those that go for a single annual cost keep away from the 5% payment fully. Nonetheless, as a result of the price is constructed into the month-to-month determine, many motorists don’t realise they’re paying greater than needed.
Why This Issues for ADIs
For driving instructors, this perception gives one other alternative to supply added worth to pupils – particularly those that’ve just lately handed their take a look at and are navigating the world of car possession for the primary time.
Whereas the comfort of month-to-month funds could attraction to youthful drivers or these on tighter budgets, understanding the true price of that comfort is essential. It’s one thing ADIs and fleet trainers may contemplate discussing with pupils as a part of their post-test improvement, and even throughout broader conversations round accountable automotive possession.
Tom Banks, automotive insurance coverage skilled at Go.Examine, commented:
“Establishing a direct debit is a straightforward approach to pay on your yearly automotive tax, however many drivers don’t realise they’re forking out further for that comfort. For many who can afford to pay in full, switching to a one-off annual cost can get monetary savings in the long term.”
He added that whereas the surcharge can’t be reclaimed retrospectively, switching cost methodology on the subsequent renewal might be a easy approach for motorists to avoid wasting.
A Educating Second
This situation may also function a worthwhile addition to CPD matters or fleet classes the place ADIs educate drivers on the broader duties and prices of driving.
In a world the place monetary consciousness is simply as necessary as hazard notion, serving to drivers perceive methods to make smarter decisions – together with how they pay for VED – might make a real distinction to their long-term motoring prices.
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