From the 1 October, the traditional paper tax disc will be scrapped and replaced with a new electronic database to track who has – and who hasn’t – paid their VED (vehicle excise duty, commonly known as ‘vehicle tax’). This means that from the start of October paper tax discs will no longer be issued to motorists, and motorists will no longer be required to display them.

The move to a digital system is part of the DVLA’s efforts to streamline the tax system in order to save British firms millions of pounds in administrative costs each year. The system could also have a positive impact on insurance premiums as more and more tax evaders are pulled from our roads.

So, are you ready for the change? If you’re still a little unsure of what to expect below is a brief rundown of what you need to know.

Paying VED

You can pay VED online via the DVLA website. If you don’t have access to the Internet you can pay at your local post office.

It your VED doesn’t run out for a while you don’t have to do anything until it expires. Your paper disc will be valid until the expiry date; however you can remove it from display if you want to as you will be logged on the digital system. When your VED runs out you renew it via the new system.

Direct Debit will also be offered as a new way to pay and will be available for motorists wanting to tax their vehicle from 1 November 2014 annually, 6 monthly or monthly. As long as the MOT remains valid the payments will continue automatically until the motorist tells the DVLA to stop taking them, or cancels the transfers with their bank. Direct Debit will not be available for first time registration vehicles, fleet schemes or HGVs.

Enforcing the new system

Authorities will track vehicles using automatic number plate recognition cameras. This will allow them to monitor all vehicles and flag those that are not taxed. The police are also able to search registration numbers on the Police National Computer system. Anyone caught driving a vehicle that is not taxed will face a fine of up to £1,000.

Buying and selling of vehicles

The new system will have the greatest impact on motorists wanting to buy and sell vehicles. From 1 October, VED can no longer be transferred with vehicles when sold which means that buyers will no longer benefit from a bike or car that has remaining tax on it. Instead, the new buyer will have to tax the vehicle themselves immediately after the purchase.

Sellers can claim a refund for any full months left on the tax via the DVLA website. Sellers will automatically receive a refund when notification is received that the vehicle has been sold, transferred, scrapped, exported, declared SORN, or changed to an exempt duty tax class.

All sellers must inform the DVLA that the vehicle has changed ownership otherwise they will face a fine.

Checking the vehicle is taxed correctly

If you’re unsure your vehicle is taxed correctly, you can use the DVLA’s Vehicle Enquiry System. Similar to the current system, you will be sent a renewal reminder just before your tax is due to expire.