Nearly One Million Drivers Cancel Direct Debits Amid Cost-of-Living Crunch
Almost one million drivers (950,377) had their Direct Debit payments for vehicle tax cancelled in the 2021-22 financial year. That’s a 9% jump from 862,529 cancellations in 2020-21, but still fewer than the 1.1 million cancellations recorded in 2019-20.
2022 Sees Surge in Missed Payments—Trend Set to Worsen
Between April and December 2022 alone, nearly three-quarters of a million (721,486) drivers had their Direct Debits cancelled. If this worrying trend continues through April 2023, cancellations could outpace the 2019-20 total, signalling growing financial strain amid the ongoing cost-of-living crisis.
DVLA Warning: Missed Payments Risk Fines and Enforcement
Under DVLA rules, a missed Direct Debit triggers a warning from the agency and a second attempt to collect payment on a set date. If that fails, the Direct Debit mandate is cancelled, and owners are informed their vehicle is untaxed. If they don’t find another way to pay, enforcement action—including fines, clamping, or even crushing—can follow.
Monthly Payments Soar as Drivers Try to Spread the Cost
So far this year, a staggering 86% of drivers choose to pay vehicle tax monthly by Direct Debit. Just over 10% pay annually, while fewer than 4% pay every six months. The shift towards monthly payments has grown 3% over two years, as drivers look to manage rising household bills more easily. Meanwhile, six-monthly payments have dropped by 9% over the same period.
Vehicle tax varies widely depending on CO2 emissions, registration year, and even original price. Pure electric cars are exempt until 2025 but still require free tax registration.
RAC Sound Alarm Over Drivers Struggling With Car Costs
Nicholas Lyes, RAC Head of Roads Policy, said:
“Spreading payments helps people budget when paying vehicle tax, so it’s very worrying that some are now struggling to do this. With recent RAC research revealing a worrying trend of drivers putting off repairs and cutting back on vehicle servicing due to budget pressures, we’re concerned the rise in cancelled DVLA Direct Debits signals wider issues with running costs.”
“Two failed Direct Debits in a row could see that bank account blocked as a payment option by the DVLA. Drivers struggling should contact the DVLA immediately, especially if already contacted by them. Ignoring this risks £80 fines plus overdue tax, and even vehicle clamping or crushing.”
“While spreading vehicle tax payments can help with budgeting, drivers should know monthly or six-monthly payments end up costing more than paying annually in one lump sum.”
