Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, pursuant to the Answer of 10 March 2015 to Question 225793, for what reason the Driver and Vehicle Licensing Agency imposes a five per cent surcharge on people who pay by monthly direct debit, but does not do so on people who pay by annual direct debit.

Motorists who buy a six month Vehicle Excise Duty (VED) licence have historically paid a ten per cent surcharge.

The Government has introduced a direct debit scheme for the payment of VED, to allow families and businesses to spread their tax payments. Under the scheme, the surcharge has been halved to five per cent when the tax is paid by six monthly and monthly instalments. The retention of a surcharge prevents a loss in VED revenue which would otherwise need to be made up elsewhere, by either increasing other taxes or reducing the Government’s investment in public services.