New Car Tax Laws

[madasahatter]

Some interesting reading here, may be of concern to some.

http://www.mirror.co.uk/news/uk-news/you-could-end-up-paying-9624861

[Chris111]

I too stumbled across this new taxation when on the government website. If I read it right any car registered after 1st April 2017 will have it's VED for the first year based on it's Co2 emissions and then a flat rate from the second year onwards. That will be £0 for electric, £130.00 for alternative fuel (hybrid) and £140.00 for everyone else regardless of Co2 emissions produced. So basically they have just reintroduced how it used to be, i.e a flat rate for everyone. However any car costing over £40,000 will be taxed based on it's Co2 emissions for the first year but from years 2 to 6 the charge will be the flat rate PLUS an extra £310.00. This means that any hybrid Lexus model costing over £40,000 will cost £440.00 a year to tax and the non hybrid ones £450.00. To put that into perspective, based on current Lexus prices a GS 300h in executive edition or luxury spec from the second year would pay £130.00 per year but the same car in f sport or premier spec would pay £440.00 per year! The GS F with its 5 ltr V8 will only cost £10.00 more. Also any new Ct or Is 300h currently charged at nil or £10.00 per year will now pay either £90.00 or £100.00 (depending on C02) for the first year and then £130.00 per year after that.

This to me is a very ill thought out tax and will undoubtedly have a huge effect on the depreciation of the cars costing over £40,000 as it only reverts to the basic flat rate once the car is 7 years old.

[GSLV6]

It's just another stealth tax by the government.  They obviously had a simpleton work out that people with more money who can afford £40K could well afford to pay extra tax, even though their car doesn't pollute more than the same model at under £40K.  It's not an emissions tax though, it's a supplemental tax on "the rich".  Instead of slapping and extra flat rate of £1500 on purchase tax, on top of the VAT, and then charging VED the same as for all other cars based on emissions, they felt it wiser to spread it over 5 years for fear of being accused by motor manufacturers of damaging UK sales on premium vehicles.  The net effect will be the same, but the consumer is a far weaker voice than the collective might of the manufacturers, for some of whom it could have been the last straw to break the camel's back of investing in post-BREXIT Britain (Nissan for example), so one wonders what sort of horse trading went on here.  Whatever, it's just another stealth tax.

[rayaans]

On 1/15/2017 at 3:29 PM, Chris111 said:

I too stumbled across this new taxation when on the government website. If I read it right any car registered after 1st April 2017 will have it's VED for the first year based on it's Co2 emissions and then a flat rate from the second year onwards. That will be £0 for electric, £130.00 for alternative fuel (hybrid) and £140.00 for everyone else regardless of Co2 emissions produced. So basically they have just reintroduced how it used to be, i.e a flat rate for everyone. However any car costing over £40,000 will be taxed based on it's Co2 emissions for the first year but from years 2 to 6 the charge will be the flat rate PLUS an extra £310.00. This means that any hybrid Lexus model costing over £40,000 will cost £440.00 a year to tax and the non hybrid ones £450.00. To put that into perspective, based on current Lexus prices a GS 300h in executive edition or luxury spec from the second year would pay £130.00 per year but the same car in f sport or premier spec would pay £440.00 per year! The GS F with its 5 ltr V8 will only cost £10.00 more. Also any new Ct or Is 300h currently charged at nil or £10.00 per year will now pay either £90.00 or £100.00 (depending on C02) for the first year and then £130.00 per year after that.

This to me is a very ill thought out tax and will undoubtedly have a huge effect on the depreciation of the cars costing over £40,000 as it only reverts to the basic flat rate once the car is 7 years old.

Manufacturers aren't stupid. They'll offer bigger discounts (enough to cover tax for 5 years for £40k+ cars I presume) or shift around the pricing to accommodate the new tax system

The whole scheme actually makes quite a lot of sense in terms of revenue. People were buying cars predominantly based on emissions to pay less tax. Once enough people jumped on the bandwagon, the revenue goes down and a new scheme is brought out to pull revenue back up again.

Take into account that 25% off all new cars dont pay any tax whatsoever and you'll see what I mean.

Hmm gives me an excuse to buy a 1-2 year old GS-F registered in April 2017 and pay less tax than I would currently :P

[julian1969]

do away with VED all together then

1 Add a new purchase tax to new car purchases based on emissions or whatever.

2 Add the VED shortfall to the duty paid on fuel.

If you have a 5.0 v8 that churns out loads of CO2 / NOX etc with a a sub 10 MPG that you use every day then you pay more. If you have a fuel sipping diesel or hybrid that pollutes less, you pay less. Similarly if you do 1000 miles per year in your LFA then you pay for how much you pollute.

Also cuts out a whole swathe of burocracy and cost at the DVLA and other institutions, come to think of it this is probably why it's not done - too many job losses in the old boys network.

 

 

[rayaans]

1 hour ago, julian1969 said:

do away with VED all together then

1 Add a new purchase tax to new car purchases based on emissions or whatever.

2 Add the VED shortfall to the duty paid on fuel.

If you have a 5.0 v8 that churns out loads of CO2 / NOX etc with a a sub 10 MPG that you use every day then you pay more. If you have a fuel sipping diesel or hybrid that pollutes less, you pay less. Similarly if you do 1000 miles per year in your LFA then you pay for how much you pollute.

Also cuts out a whole swathe of burocracy and cost at the DVLA and other institutions, come to think of it this is probably why it's not done - too many job losses in the old boys network.

 

 

Thats a silly idea. 

1) the new VED is going to be used for repairing public roads. If you only have new car purchase tax (which already exists BTW and is called VAT), not only is the price of the car going to go up meaning less people buy new cars and hence government dont make any VAT, but also, there won't be any "running" tax year on year which means revenue will go down.

2) Price of fuel in the UK is already atrocious. Much of the price we pay is tax. Adding more duty onto fuel means more expense for anyone who travels and busineses who pay for fuel. But again, I dont think they can generate enough income from it. Take a Ford Fiesta which will now be on £140 a year from April. If driving 10k per year, with an MPG of 50, you need 200 gallons of fuel per year so about 900L. To make £140 per year off fuel, you need to raise the price of fuel by 15p which is ridiculous really as its already so high.

 

The whole idea is that C02 has nearly been taken out of the equation is because currently, everyone buys eco cars which are peanuts to tax per year and hence reduced revenue to a point where it makes it unsustainable. The most popular car in the UK is the Ford Fiesta - generating £140 from them will probably generate the same amount as it currently does with all cars combined.

[julian1969]

Just now, rayaans said:

Thats a silly idea. 

1) the new VED is going to be used for repairing public roads. If you only have new car purchase tax (which already exists BTW and is called VAT), not only is the price of the car going to go up meaning less people buy new cars and hence government dont make any VAT, but also, there won't be any "running" tax year on year which means revenue will go down.

2) Price of fuel in the UK is already atrocious. Much of the price we pay is tax. Adding more duty onto fuel means more expense for anyone who travels and busineses who pay for fuel. But again, I dont think they can generate enough income from it. Take a Ford Fiesta which will now be on £140 a year from April. If driving 10k per year, with an MPG of 50, you need 200 gallons of fuel per year so about 900L. To make £140 per year off fuel, you need to raise the price of fuel by 15p which is ridiculous really as its already so high.

 

The whole idea is that C02 has nearly been taken out of the equation is because currently, everyone buys eco cars which are peanuts to tax per year and hence reduced revenue to a point where it makes it unsustainable. The most popular car in the UK is the Ford Fiesta - generating £140 from them will probably generate the same amount as it does from other cars combined!

 

but

1) there is already a premium on buying a new car in existing and soon to be introduced ved rules - and saying the ved is going to be used directly on roadworks is a political sop to the masses who compain (rightly) about the state of the road network. There is no reason not to divert money for this purpose now as it (supposedly) all goes into one big pot. The running tax year on year would come from the ved component of the petrol duty so that is incorrect.

2) I don;t see the issue here either - unless of course you drive a £0 tax car for 50k miles a year - then, yes, you will be out of pocket. It directly relates your use of a car to how much you pay. Again, if you drive and pollute more you pay more, if you are more mindful of your driving, taking public transport if possible, driving in a more conservative manner the savings impact you more fully. I cannot see how this is a bad idea unless you are more interested in gaming the system to drive an pollute with impunity instead of being a responsible car owner. To put it plainly if your hypothetical fiesta driver drives enough to pay the £140 petrol ved and not have to pay £140 traditional VED how exactly is he worse off he's still paid £140 to the govornment. If his use of the car then increases for some reason in situation 1 he's be paying for the increased pollution and damage he causes to roads and in situation 2 he would not. Again, how is this a bad thing (from an overall point of view)? Of course from the owners POV it's costing him more but then he's using more of the countries resources in increased wear on the road network so it's fair.