Tax shock to green

car market

Volvo XC90 T8 Twin Engine, charging

IT appears that buyers of lower emission cars are going to get something of a bumpy ride thanks to the latest changes in vehicle tax regulations.

In fact they will bear the brunt of the new rules with those who buy cars in the 91-100g/km of CO2band hardest hit.

Some will see their tax costs over six years rise from nothing to £820.

That's the stark reality of a recent investigation into the fairness of the new Vehicle Excise Duty system which starts in April 2017.

Automotive experts Parkers, who instigated the investigation suggest that of the estimated £5.15 billion of additional revenue the new VED rules will generate by 2023, £4.69 billion will be from buyers of cars emitting 1-130g/km of CO2, all of which are currently tax-free for the first year.

Initially, the 2017 VED system appears to be an update of the existing scheme, albeit with new bands created and others combined.

Notably, only buyers of cars with zero CO2emissions will have the ability to remain car tax-free under the First Year Rate, as any model producing even 1g/km of CO2will be subject to a charge from next year.

Replacing the sliding scale for year two onwards is a streamlined system which penalises buyers of cleaner cars and effectively provides a financial incentive to purchase models which pollute most.

Zero-emission cars again remain free, but all others face a yearly bill of £140.

There's a further surcharge for cars with a list price of £40,000 or higher - regardless of emissions - where an annual charge of £310 from year two through to six will be imposed.

Buy a new car emitting just 99g/km of CO2from April 2017 and instead of enjoying tax-free motoring, you'll instead be lumbered with an £820 levy over the first six years of ownership.

Premium plug-in hybrids - such as the recently launched Volvo XC90 T8 Twin Engine - also take a whack despite their greener credentials.

Select one with emissions quoted at 50g/km that also costs over £40,000 and by the time it's six years old its owner will have contributed £2,260 to the Treasury instead of nothing under the present rules.

Meanwhile, those who opt for a high-polluting car priced below that £40,000 cap will actually be up to £925 better off under the new scheme after six years.

The whole thing seems upside down to me but behind it I see the rise in lower emissions cars having an impact in the form of lower revenue.

As the number of themincrease I suppose they will have to face up to the taxman. But giving more polluting cars a financial advantage is just plain daft.


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