What do these changes mean?
Both changes seem to have been made to overcome practical difficulties motorists have experienced by the rigid DVLA systems. The changes appear to have been introduced to apply from 1st September 2008.

Taxing a car in advance of the renewal
This is a topic covered in SORN10 where we identified serious difficulties for motorists who were away overseas or even in remote parts in the UK where reaching a Post Office would not be easy to retax a car not earlier than the 15th day of the month preceding the new Vehicle Excise Duty period. Carrying the vehicle's registration, insurance and MOT documentation in your travel luggage is neither prudent or desirable, but previoulsy the DVLA position had been quite harsh - "you will retax your car when we say, and not a day sooner!" Well now that unreasonably tight deadline has been eased by 10 days so now you can renew your car tax "from the 5th day of the month" preceding the start of the new VED tax disc period.

Five days of grace with you old tax disc
A form of grace period has been reintroduced with the essential condition that "you must have made your application (by phone or online) before the current vehicle tax disc or SORN expires". So simply

Important changes announced by DVLA Extract from DVLA leaflet INS176/5 9/08

forgetting to renew the tax disc and continuing to drive after the expiry of the previous disc is, quite reasonably, not acceptable. It seems the 5 day grace period has been introduced because of the practicalities of the getting a new tax disc online or by phone where the tax disc has to be posted to the applicant by DVLA. So a renewal on the last day of the month would inevitably mean the postal delivery of the new tax disc could take 3 days, plus a 2 day weekend, to reach the motorist.

Webpage posted: 13.12.08