CHANCELLOR George Osborne will today announce that the paper car tax disc is to retire after 90 years - with motorists being offered the opportunity to pay the tax monthly by direct debit.
For the first time motorists will be able to pay their Vehicle Excise Duty (VED) monthly via direct debit under plans being announced by the chancellor as part of his Autumn Statement.
The Government will also make it cheaper to pay by six monthly instalments in a move that is expected to save motorists, who chose to spread their payments over the year, more than £20 million.
Those who aren't online or do not wish to pay by direct debit will still be able to tax their car in person at the Post Office or over the phone.
Speaking about the proposed changes a Treasury spokesperson said: "This is a visual symbol of how we are moving government into the modern age and make dealing with Government more hassle free."
The move is expected to save businesses £7 million a year in administration costs alone.
The DVLA and police already rely on the electronic vehicle register so the tax disc is no longer needed for enforcement purposes.
The changes will come into effect on October 1 2014 and will be legislated for in the Finance Bill 2012
Road tax was introduced in the 1888 budget and the current system of excise duty applying specifically to motor vehicles was introduced in 1920.
