The vehicle licensing agency has been swamped by motorists enquiries, as the traditional road disc is ditched for an electronic system.
The Swansea-based Driver and Vehicle Licensing Agency (DVLA) said it was struggling to cope with what it said was "unprecedented demand".
A DVLA spokeswoman told Sky News: "We are currently experiencing unprecedented demand which means that some customers may be experiencing slow response times or having difficulty accessing the service.
"We are of course very sorry for any inconvenience and we are urgently investigating to improve service quality for the minority of our customers that are experiencing issues."
It said 270,000 enquiries were made on Tuesday, up 30,000 on the same day last year.
Motorists have reported lengthy queues on the enquiry line and slow or halting website access.
Tax discs have been placed on motorists' windscreen since 1921, but as of today they are no longer required.
Known officially as the vehicle excise duty (VED), the tax can be paid either online, over the phone or at post offices.
The Government said the new system has the potential to save the DVLA up to £7m annually in administration costs.
However, motoring groups have warned about the extra revenue-raising potential of the new system, while a survey has shown many drivers and riders are unaware of its implementation.
From this month, buyers of vehicles will no longer be able to use the remaining time to expiry paid for by the previous owner.
Buyers cannot take advantage of the remaining months and days of the car's existing taxed period and will need to renew the excise duty themselves.
Significant pre-renewal time for both discs and MOTs have long been seen as an added selling point for vendors.
New owners will need to renew the disc after purchase or classify it through a statutory off-road notification (SORN).
Motoring groups said they had received complaints from members that the Government can potentially "double tax" owners.
The RAC has also expressed concerns that there could be a spike in drivers on the roads without tax.
It said the possible scenario could mean Treasury coffers lose out on up to £167m annually, although the DVLA dismissed the claim and said there was no reason to expect a spike in tax evasion.
Automatic number plate recognition cameras and manual police checks of vehicles, which are already used to find uninsured drivers, is to be used to snare untaxed vehicles.
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