The current car tax system will be replaced by an electronic alternative
Car tax discs will be axed from next year.
Chancellor George Osborne made the announcement in his Autumn Statement today, revealing that the traditional paper car tax discs will be retired from October 2014, and replaced with an electronic system.
The new system will allow motorists to pay their car tax by monthly direct debit.
Having been in service since 1921, paper tax discs are increasingly becoming outdated, with both the police and the DVLA relying on electronic means instead. Reports suggest the move could save businesses up to £7 million in administrative costs.
The Treasury said the plan showed the government was moving "into the modern age".
The Chancellor also announced that fuel duty tax will be frozen for another year. He said the cancelling of fuel duty rises had been a "major priority" for the government. Fuel duty was originally set to rise by up to 2p per litre in January.