Why do we have to pay 10% extra on car tax if we pay twice in a year?

Dickster_2

I've never understood how a Government Agency can see this as equitable.

There is very little additional admin now that we pay online so how can they jusify such a high interest charge. It must have a tremendously high AER/APR that would be screamed at if it were a High Street retailer. Can anyone work it out?

Add to that the £2.50 credit card charge for each payment then we really are being ripped off.

R

vikingaero

It's to encourage you to pay in one go for a full year. You could argue that it's unfair for someone who buys one years tax to subsidise those that don't. And if you pay by debit card then there's no extra charge.

lisyloo

It's punitive i.e. to encourage you not to do it.
It's a bit like Oyster cards on the tube where it's something like £1.50 per journey on Oyster but £4 for cash. There is no way it can be justfied financially, so it's punitive.

almillar

And yes, it does cost more to send out the reminder letter, deal with phone, post, face to face queries, and of course process the payment and print the disc all twice as often as annual renewals, so fair enough I reckon. Some of these costs do still apply to online purchases
Your APR would surely be 20%, but it's not interest.

dzug1

Dickster wrote: »

I've never understood how a Government Agency can see this as equitable.

There is very little additional admin now that we pay online so how can they jusify such a high interest charge. It must have a tremendously high AER/APR that would be screamed at if it were a High Street retailer. Can anyone work it out?

Add to that the £2.50 credit card charge for each payment then we really are being ripped off.

R

Why does it HAVE to be equitable anyway? I think it is anyway, but why does it have to.

There's still a fair amount of additional admin - double the reminders to be posted out, double the number of disks to be issued. And not everyone pays on line. Plus loss of interest on the 6 months tax not paid.

And £2.50 cc charge is probably a fair average of what the cc companies charge DVLA anyway

Ripoff - I don't think so.