Buy Now or You Will Pay Later
by Jonathan Clensy |
posted 22 February 2017
If you're planning to buy a new car this year, don't wait too long. Delay could cost you hundreds of pounds in extra tax! Come April 1st 2017, the rules regarding Vehicle Excise Duty (VED) or car tax as it's usually known, are changing.
The thinking is based on the carbon dioxide (CO2) emissions of the vehicle and the introduction of a new £140 standard flat rate. But, cars that have a list price of over £40,000 will also attract additional charges. Although no one will pay more for their currently owned car, the changes will impact on motorists purchasing a car first registered on or after 1 April 2017.
Currently, the average that all UK motorists pay in car tax is £166. However, according to the gov.uk website, “in the new system most motorists will be paying an annual VED payment of £140.” All well and good perhaps. But all is not as it seems.
Although zero-emission cars continue to remain free of tax, the government are replacing the current Standard Rate sliding scale so that new buyers of even cleaner cars will now penalised. From two-years onwards, the new streamlined charging system means that nearly all drivers will have to find the money to pay an annual £140 tax bill.
These changes mean that even buyers of Britain’s cheapest cars will now find an increase in their car tax bill. Popular models such as the Ford Fiesta, Vauxhall Astra and Nissan Qashqai, will all lose their current exemption from road tax.
Higher Tax Rates Across the Board
There’s also a further surcharge for cars with a list price of £40,000 or higher – regardless of emissions, with an annual charge of £310 from year two through to six being imposed.
For example, if you spend £5,995 on Britain’s cheapest car, a Dacia Sandero, you’ll currently pay nothing in tax for the first year, and £30 every subsequent year. But under the new tax regime beginning this April, you will be charged £160 for the first year and then £140 every year after that, a massive increase. It can get all a bit confusing.
Digital Editor-in-Chief Tim Pollard of Parkers, the UK’s leading car review website, commented: “We recognise that the Government has to act to keep VED car tax up to date with cleaner engine technology, but some of the quirks of the new system uncovered by Parkers’ investigation are distinctly unfair to Britain’s motorists. We predict widespread confusion among car buyers… the goalposts are moving dramatically and many people’s tax bills will rise significantly.”
Only buyers of zero CO2 emissions cars are not going to have to pay tax under the new VED rules. Though, any model producing even 1g/km of CO2 will be subject to a charge and buy a new car emitting just 99g/km of CO2 from April 2017 and you’ll find yourself burdened with an £820 levy over the first six years of ownership. So much for encouraging tax-free motoring.
Premium plug-in hybrids will also have to reach for their cheque books, greener vehicles or not. Buy a car with emissions quoted at 50g/km that also costs over £40,000 and by the time it’s six years old you’ll have contributed £2,260 to the Treasury. Up until now, the car would have attracted a nil rated VED. There does seem to be some confusion as to the real reason behind these new levies.
It seems that buyers of economical small cars and the supposedly favoured hybrids are going to face the biggest tax increase of them all. And that, instead of being exempt as in the past, all owners of new cars registered on or after April 1st 2017 will have to find the funds for these extra tax payments.
Remember though, buy a car now and the new rules won’t apply. So, if a new car is on your agenda, make sure you’re no April Fool this year and get down to that showroom ASAP.