Car Tax Anomalies

worid

I have only just noticed that if I pay for 6 months car tax with my debit card it cost me £82.50, but if I pay a one off payment by direct debit, it cost £78.75 and I wondered why as underneath the options, it clearly states that there is no fee for paying with any debit card.  They will get the same amount at the same time so it does seem odd especially as they state no charge.  I looked int it some more and apparently there is a 5% surcharge on a direct debit, but a 10% surcharge on a debit card, so surely there is a fee/charge for paying with a card.  Is this correct and/or legal.  

daveyjp

It has always cost 10% to have 6 months VED to cover the extra cost in producing 2 renewal notices a year.

AdrianC

...but if you pay for 12mo at one go, however you pay - cash/card/DD - it's £150.
https://www.gov.uk/vehicle-tax-rate-tables/rates-for-cars-registered-on-or-after-1-march-2001
From that price, it must be Band E, 2001-2017, 131-140g/km.

The 10% supplement is not for paying by card - it's for only buying six months at a time.
It's always been there, since at least the 80s, 10% premium - however you pay, cash at the PO counter or whatever.

When they introduced DD payment, they offered a reduced premium for buying 6mo, only 5%.
If you pay for 12mo by 12x monthly DD, you pay the same 5% premium - £157.50/yr.

Car_54

10% sounds reasonable.

But if you look on it as a credit arrangement, paying by two instalments, it means an APR of about 45%. Not such a good deal after all!

molerat

Single 6 monthly cash / card / PO payment has always been the most expensive way to pay VED.

Jenni_D

worid said:

I have only just noticed that if I pay for 6 months car tax with my debit card it cost me £82.50, but if I pay a one off payment by direct debit, it cost £78.75 and I wondered why as underneath the options, it clearly states that there is no fee for paying with any debit card.

OP's query showing the discrepancy - the way I'm reading the replies they're comparing the cost difference between 6 months and 12 months tax, and that 2x 6 months is always more than 1x 12 months. This is not what the OP is querying ... the OP states that to pay for 6 months by DD is less than to pay for 6 months by debit card. This would be illegal (AFAIK) as payment for the same item should be the same regardless of payment mechanism. (I accept that the OP may have misread the form, and the DD payment was actually for 12 months but taken in 2x 6 months intervals whereas the debit card payment was only for 6 months).

molerat

They are not the same thing though.  You can pay for the full 12 months in one go.  You can also pay for the 12 months in instalments, either by 12 monthly or 2 x 6 monthly DD payments, for which there is a 5% charge.  Lastly you can buy 6 months VED for which there is a 10% price differential. A 1 Kg bag of sugar is not half the price of a 2 Kg bag.

Jenni_D

Which means that the OP has probably misread the form/website and is not comparing like with like.

facade

If you check on https://www.gov.uk/vehicle-tax-rate-tables

Rates for second tax payment onwards

Fuel type	Single 12 month payment	Single 12 month payment by Direct Debit	Total of 12 monthly payments by Direct Debit	Single 6 month payment	Single 6 month payment by Direct Debit
Petrol or diesel	£150	£150	£157.50	£82.50	£78.75

You see that indeed there are different 6 month prices according to the payment method (any card credit or debit/ direct debit).  No doubt the excuse is that there is a 10% surcharge for buying 6 months tax, but you get a "discount" down to 5% if you give them your bank details.

The solution is to buy 12 months (you can use a credit card), and SORN it if you only want 6 to get the refund.

Flight3287462

OP have you looked at the finance costs if you pay your car insurance monthly.

worid

Thanks everyone for your input.  I was just querying why a one off 6 month payment i.e. paid all at once cost more by debit card than direct debit as the money is recievd by DVLA at the same time.  I appreciate that 6 months would attract a surcharge but it is 5% of DD and 10% for a debit card.  I think facade and AdrianC have seen it in a way I didn't.  In other words both payments attract a 10% surcharge but it is reduced to a 5% surcharge if you pay by DD. I guess it is easier for them to carry on with the DD when they have your bank details and they don't have to wait for you to pay.  It seems wrong to me but proves they are not charging extra for a debit card but less for a DD.  I will for once in my life buy a years worth for £150 using a card.