MOTORISTS face paying a new charge of about £2.50 a year to help fund the cost of phasing out paper driving licences and replacing them with European-style photocard documents, under proposals being considered by ministers.

The planned “annual registration fee” will generate more than £80m for the Driver and Vehicle Licensing Agency (DVLA) and could come into force by 2007.

Alongside the new fee, the 21m motorists in Britain who already have a photocard licence are likely to be charged £19 or more to renew their documents every 10 years.

The first of these will come up for renewal in two years’ time. Drivers with a paper licence — numbering almost 20m — may also be forced to pay a fee to switch to a photocard.

Paper licences will become obsolete by 2010 under European Union rules and legislation is currently going through parliament to grant the DVLA powers to order a mass recall of the documents.

“With discussions under way about a national road pricing scheme and with the London congestion charge increasing from £5 to £8 next month, it does begin to gall a bit on motorists when they see these extra taxes creeping in,” said Edmund King, executive director of the RAC Foundation.

The proposals follow a DVLA consultation last year on driving licence and vehicle registration fees. The agency believes it needs to generate an additional £75m-£95m each year to cover the cost of reforms.

It had originally sought to make photocard renewals and transfers of paper licences free and favoured a new annual registration fee of £4.50 instead. This would have applied to all vehicles — even if they were not on the road.

However, it is understood that the DVLA was forced into a rethink following objections by motoring groups during the consultation period. It is now likely that classic car owners, many of whom are exempt from paying road tax, and disabled drivers will not have to pay an annual registration fee.

Plans to make driving licences free for those under 21, are also likely to be dropped. However, the cost of a new licence could fall from £38 to £30. Having a licence reissued because of a change of name or address will remain free.

The one-off fee paid by motorists to register a new car and gain a V5 document naming them as the registered keeper may also be reduced, possibly from £38 to £28.

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