Question to the Department for Transport:

To ask the Secretary of State for Transport, what proportion of vehicle tax is paid in instalments using direct debit; and what assessment she has made of the potential impact of charging a 5% surcharge when paying vehicle tax by direct debit on lower income motorists.

While the Driver and Vehicle Licensing Agency administers and collects vehicle excise duty (VED) on behalf of HM Treasury, decisions on VED, whether structure, rates or alternatives are a matter for the Chancellor of the Exchequer.

Paying VED by direct debit allows motorists to spread the cost, helping families and businesses in managing their finances. Those who choose to use direct debit pay a low surcharge of five per cent against the annual rate of duty for the vehicle. Typically, a motorist is better off paying by direct debit instead of buying two six-month vehicle licences which if not purchased by direct debit, carry a surcharge of 10 per cent.

The monthly average of vehicle keepers that choose to pay their VED by direct debit is just over 39 per cent.