Car buyers ‘rush

to beat tax hike'

Car showroom
Austin Collins, managing director, BuyaCar.co.uk

CHANGES to the way cars are taxed could see a surge in new car sales in the first quarter of 2017.

Some of Britain's top selling models, including the likes of the Ford Fiesta will no longer be exempt from road tax following changes announced by the Government in the Budget of 2015.

The new tax rules come into effect in April and will see the road tax bill for some models including so-called eco-friendly hybrids soar from nothing to £925 over three years.

From April 1 only cars with a zero emission rating - such as pure electric vehicles - will be exempt from road tax.

All other new vehicles sold after that date will be taxed on a sliding scale in the first year of registration and motorists will pay £140 a year after that.

Buyers of models with a list price of more than £40,000 will face an additional charge of £350 a year for the first five years the car is on the road.

An analysis by online car retailer BuyaCar.co.uk suggests that owners of some of Britain's cheapest cars will face a tax hike of more than 900 per cent under the new regime.

"Anyone buying a car after April next year could be in for a massive shock," said Austin Collins, managing director of BuyaCar.co.uk.

He said many retailers were already reporting that buyers are changing their cars early to ensure that they are delivered and on the road before April 1 to ensure they fall within the current tax regulations.

Under the new framework announced by the then Chancellor George Osborne in 2015, someone buying a Ford Fiesta 1.0T EcoBoost Zetec with a CO2 rating of 99g/km after April 1 2017 will now have to pay a first year rate of £120 then £140 per year thereafter - a £400 road tax bill over three years.

If bought before April 1 no road tax is payable as the changes do not affect cars registered before the changeover.

Among the hardest hit will be drivers of the Volkswagen High up! city car who will see their tax bills rising from £40 over the first three years to £420 - a 950 per cent increase.

BuyaCar.co.uk says: "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 the new car tax system will charge owners £160 for the first year and £140 every year after that, which is a 633 per cent increase."

At the top end of the scale a Land Rover Discovery Sport HSE Black delivered before April would attract £390 in tax over three years but under the new system that rises to £1,100 as the car's official price is more than £40,000.

The fuel-efficient Porsche Panamera 4 E-Hybrid, officially rated at 113mpg with a CO2 figure of 56g/km, is currently exempt from tax but from April the bill over three years will now be £925.

"The new scheme is flawed because it doesn't take account of the actual sold price," added Mr Collins.

"Everyone knows most cars are rarely sold at the list price because there are often huge discounts available. So when we're selling a £40,000 car for £35,000, why should a customer have to pay a wealth tax?

"It's also going to be expensive for people who buy extremely efficient hybrid cars with low emissions, like the Toyota Prius: they'll be paying tax at pretty much the same rate as someone who buys a big SUV."

Under the new system the Treasury is expected to earn more than a billion pounds a year in extra car tax revenue from 2020.

Announcing the changes back in 2015 Mr Osborne highlighted the fact that car tax revenues had been declining because of the rising number of fuel efficient vehicles on the road.

In 2015 the Society of Motor Manufacturers and Traders revealed that one in five new cars sold was tax exempt.

From April 1 2017 the first year tax rate for new cars will be:

CO2 emissions Road tax

0.......................... £0

1-50.................... £10

51-75.................. £25

76-90.................. £100

91-100................ £120

101-110.............. £140

111-130.............. £160

131-150.............. £200

151-170.............. £500

171-190.............. £800

191-225.............. £1,200

226-255,,,,,,,,,,,,,, £1,700

256-plus,,,,,,,,,,,,, £2,000

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