02/09/2014 08:25 BST | Updated 01/11/2014 05:59 GMT

Death of the Tax Disc Looms: Know the Rules or Risk Getting Hit in the Pocket

From October 1, unless you want to hold onto it as a memento, or even a collectors' item, you can chuck your car tax disc in the bin.

After almost a century, the little paper disc will be abolished, because the DVLA now has new and improved digital methods of keeping tabs on you and whether or not you've paid. The excuse that your new tax disc is in the post will no longer cut the mustard...

But a survey by the AA has revealed that 42% of motorists are in the dark about the changes - which means they could unwittingly get hit in pocket. If you're amongst the unprepared, read on...

In a nutshell, number plate recognition cameras will end the need for tax discs in the post, automatically enforcing penalties for those forgetting to renew. The new rules mean that drivers will now have the option of paying via direct debit or the Post Office.

Let's face it - most of us don't mean to forget to renew our car tax. Owning a car means a lot of admin, which can be difficult to keep on top of, and fines of up to £80 for being forgetful.

Soon, we'll be able to pay by direct debit either monthly, every six months, or annually, and worry no more. The key advantage is that you don't need to remember to make your payments - the DVLA will continue to take them until you tell them to stop.

Financial Pitfall Number 1...

But the not-so-good news is that the monthly payment option will incur a 5% surcharge on top of the road tax itself, while 10% will be added when you pay for sixth months' tax. Only if you pay annually does road tax come at no extra charge.

Financial Pitfall Number 2...

Those of us who particularly need to be aware of these changes are used-car sellers. When selling a car, any remaining road tax will not transfer to the new owner with the vehicle.

The onus is on the seller to inform the DVLA of the change of ownership. Failure to do this means the seller could still be fined and liable for speeding fines and parking tickets for a car they no longer own. Failure to inform the DVLA could result in fines of up to £1,000.

The seller will be able to get road tax refund on any tax remaining on the vehicle, while the buyer will have to pay to re-tax the car.

It is easy to check if your vehicle is taxed by heading onto the Vehicle Enquiry Service Online. This should be the first step for anyone planning on selling a vehicle.

Equally, used car buyers must be aware that any remaining tax on a car they buy will no longer be transferred after a sale, meaning that the owner must tax the vehicle before they can drive away.