The Chancellor George Osborne is expected to announce in the Autumn Statement today (Thursday, December 5) that the tax disc will be scrapped.
The disc will instead be replaced with an electronic system, with the DVLA and police now relying on an electronic register.
The new system will allow people to pay the charge by monthly direct debit, while motorists currently are able to choose whether they pay VED in 12 or six month instalments.
The latter option costs 10% extra each year, but this is expected to be cut to 5%.
The new option of paying by monthly direct debit is also expected to cost 5% more than paying for a full year in one go.
The changes are expected to come into effect in October 2014.
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