Could the move towards Direct Debit as a primary payment method for road tax provide a major boost to consumer confidence?
While Direct Debit is nothing new – indeed, the earliest form of an automatic debit transfer system dates back to the 1960s – the popularity of it as a payment method continues to grow from year to year.
Figures released by BACS last year showed that 73% of household bills are paid by Direct Debit (increasing from 71% the previous year) and that around nine out of ten British adults have at least one Direct Debit set up.
New road tax rules, which have just taken effect, mean that owners of new cars with a list price of up to £40,000 registered after 1st April 2017 will pay a variable amount of road tax (formally called Vehicle Excise Duty) of up to £2,000 in the first year, dependent upon the vehicle’s CO2 emissions.
In subsequent years, the payment reverts to a standard rate of £140 (or £130 for alternative fuel vehicles). In short, it’s complicated … but while many still pay their road tax annually by debit card or credit card, it’s a straightforward matter to set up a Direct Debit payment, either online or at a Post Office.
It’s currently possible to pay road tax by Direct Debit collected yearly, six-monthly or monthly. There’s a 5% surcharge for monthly and six-monthly Direct Debit payments – so individuals have to balance whether this offsets the convenience of being able to spread payments rather than pay a lump sum each year.
Either way, Direct Debit arguably represents the simplest way to pay your road tax.
Rather than having to manually pay by debit or credit card online, by phone, or at a Post Office, once a Direct Debit is set up it can be left to run, giving the peace of mind that future payments will be collected automatically at the specified intervals.
It’s that very consumer confidence that continues to increase the uptake of Direct Debit year after year – not just for road tax, but for a wide range of other personal and business payments too.
If you’d like to find out more about L&Z’s business services for secure payment collection, please speak to our expert consultants today on 0121 234 7999, or submit an application here.