How will the changes to car tax affect you?

The clue is in the words VED – no mention of road, only vehicle.

…and bigger cars take up more road space

…and heavier vehicles cause more wear and tear to the roads

It’s unlikely that common usage of incorrect terms will change in a hurry so the best option is just to feel smug.

The manufacture and eventual disposal of an expensive car will cost more than for a more basic model, so there are definite environmental implications. Anyone paying £40k for a car will not be short of money and can well afford to contribute more to the upkeep of our roads, etc.

Since when did VED pay for the upkeep of our roads? And why should someone who chooses to buy a more expensive car have to subsidise other road users? They’ve already paid more vat – which far outweighs VED.

An expensive car is often better built, better components,will last longer and may well be better looked after, thus using no more resources, or even less than a cheapo car.

Not convinced by these arguments. If it were another party in power I might buy the wealth tax envy argument……………., But I’m keeping an open mind.

You invited us to suggest an explanation for the additional tax and that was my suggestion. If you can prove that the manufacture, use and eventual disposal of an expensive car has lower than for a cheaper one I will be interested in seeing the evidence. I fully support this measure.

Thanks for your comments. As I said I’m keeping an open mind. I don’t know whether we can “prove” either way; I put a question forward.

What I’m personally not comfortable with is the “mansion tax” approach where because someone chooses to spend their money – money that has already been taxed – in a particular way should be hit with a punitive tax simply for spending it. If it could be shown that all cars costing £40 000 or more were environmentally costly and all cars of £39 999 and less were not I might be convinced. Any evidence out there?

£1.5 k spread over 5 years is not a lot – hardly a punitive tax. I presume there was an explanation of the forthcoming changes in duty and that could answer our questions. Having polished my crystal ball, I foresee an increased number of cars marketed at just below £40k.

Malcolm – The rationale for the £310 annual supplement for cars costing £40k or above is: “To ensure those who can afford the most expensive cars make a fair contribution, a supplement of £310 will be applied to the SR of cars with a list price (not including VED) over £40,000, for the first 5 years in which a SR is paid.”

https://www.gov.uk/government/publications/vehicle-excise-duty/vehicle-excise-duty

By “punitive” I meant it punishes people who choose to spend more on a car. I think £1500 is quite a lot. 18 months gas and electricity for example.

That’s peanuts compared with the depreciation in value when you drive a £40k car out of the showroom.

wavechange, thanks for digging this document out. It makes interesting reading, if lacking logic.

VED was CO2 based, but as new car emissions have reduced the VED take has also come down, hence the need to restore income. So low CO2 vehicles will pay £140, just like everyone else. Except – if you choose to buy a high emissions vehicle you are only “penalised” in the first year – from an extra £360 for a 170g CO2/km to £1860 if it chucks out more than 255g CO2/km. All these cars then only contribute £140 for the rest of their lives (subject to normal changes) despite the fact they are creating at least 2 or 3 times the pollution.

If you choose to spend £40 000 or more however, out of taxed income, you are being asked to subsidise for 5 years the rest of the motorists, because the tax they pay is insufficient to make up the total required (“ensure those who can afford the most expensive cars make a fair contribution”). What do they mean by “fair”. But it matters not that many of these cars will be low on emissions, for all their lives.

So the logic is, don’t worry about emissions – if someone is prepared to pay a bit more in the first year in VED they can pollute as much as they want for ever. But if someone has the sense to buy a low polluting car, but has the means to buy a nicer vehicle, then penalise them for 5 years. Logic? What logic. Or does it appease the envy brigade|?

We can lose sense of value when we just look at prices. For example, you buy a house and if you haggle, might get £5k or £10k off – maybe by bargaining or pointing out items in the survey. But many think well, I’m spending £400 000 so it’s not worth bothering about (and believe me I’ve heard this a few times). Well £5000 is still £5000 in whatever context; most would love to be given it.

Depreciation is only relevant if you choose to sell your car. The £1500 penalty (additional tax to subsidise others) is still worth the same whether you buy a £40k car or a £20k car. Seems a symptom of the consumer society that we can lose sight of true values.

The official information backs up my guess. I would like to see more tax payable on luxury goods – and less on essentials, which would benefit most people. We used to have higher rate VAT on luxury goods and at one time there was Purchase Tax.

You pay more tax already on “luxury” goods as they are more expensive than “essential” goods. It’s vat. So you buy a £40k car and pay £8k vat, or a £12k car and pay £2.4k. You are also (I hope) paying out of income that has already been taxed. “Essential” goods like food, housing, water, are not taxed and energy is taxed at the minimum allowable (EU) rate of 5%.

It is, to some, popular to penalise the wealthy (although I don’t regard a £40k car as restricted to them), and people often buy “luxury” goods, whatever they might be, as gifts for a loved one.

If you can own your own home then you must be wealthy (compared to many) and therefore perhaps. as a luxury, it should be heavily taxed as a “fair contribution” toward the provision of social housing. Maybe put vat on all house purchases? No – before anyone leaps to the button – I don’t think so. But we must be careful how we treat others, and resist the politics of envy.

We could get into a discussion of fairness in society – which I look at from a non-political perspective – but that would be off-topic. At least we now know the rationale for the annual supplement on cars costing £40k or more, and I support it.

So when a ‘heavy car’ goes out of control in a town centre and ploughs into a bus stop or hits people on a Zebra crossing that’s alright because the driver and passengers are better protected? I think you need to reconsider your policy, Kocour. There is no need for ‘heavy cars’ on our small roads.

And don’t forget the cyclists and motorcyclists.

It seems to be buses and dust carts that are villains as well. “Heavy” cars have appropriate brakes. I suspect the argument is that when some idiot crashes into you, you have better protection in a more substantial vehicle.

If we turned the outskirts of towns and cities into car parks and only allowed in hybrid/electric buses, low emission city cars (on hire in the car park), or pedal / electric bikes we would reduce congestion, dramatically reduce emissions (forget about tinkering with NOx from Euro 6 engines – huge amounts come from their older predecessors) and we might begin to improve the health of city dweller and visitors. But I realise that the final solution will be over-ridden by our individual wish to do as we please.

The horrific Glasgow incident involving a dustcart was a tragedy brought about by a lying driver and a delinquent employer. Nothing can protect against that. I have read and heard a lot in local papers and news bulletins about collisions between buses and people in town centres; sometimes they were caused by carelessness by the pedestrian, sometimes as a reaction to behaviour by other drivers, and occasionally by a driving error by the bus driver. Such incidents are often fatal because of the sheer mass of the vehicle causing the impact, notwithstanding the quite low speeds involved.

In my opinion, given that cars of all sizes have seat belts and airbags to protect their passengers, trying to justify the use of big cars on safety grounds is wrong. Brakes, however powerful, have to be activated by human intervention so there is a built-in fallibility.

I don’t know how many major city centres there are in the UK, possibly 50-60, but many of them have already introduced traffic reduction schemes with park-&-ride facilities and subsidised public transport. I agree with Malcolm on the need to progress with more of these schemes and be much more ambitious with alternative motive power to cut emissions. However, there are thousands of district centres and suburban locations where schemes of this nature will not work or be affordable and where the answer to people’s transport desires should not be ever bigger cars and rising levels of pollution. I believe an economic curb on vehicle capacity and engine characteristics is essential. Behaviour also needs to be checked; some people would drive their children into the classroom if the doors were wide enough. I would suggest drop-off points about 400 metres away from the school gates; this would provide exercise, socialisation between children on their way to school, and punctuality discipline, as well as road safety and less pollution.

Wavechange rightly reminds us of the risk to pedal cyclists and motorcyclists in the event of impact with vehicles. In my younger days I was twice knocked off my bike by cars driven badly. In town and city centre we have unwittingly allowed dangerous cycling to become a hazard for pedestrians and other road users but at least no emissions are involved. I cannot argue with Malcom’s finishing thought: “the final solution will be over-ridden by our individual wish to do as we please” and that is the crux of the problem.

We nevertheless have a duty and responsibilty to consider our children and grandchildren in particular. My generation has created the pollution that will have a greater effect on them than ourselves and its up to us to make the necessary changes before the situation becomes irreversible. From all accounts I believe we have almost reached that point.

I agree we must tackle pollution. I have firmly come to the view that whilst reducing the pollution from individual vehicles can only help, it cannot be the real solution – as more vehicles are on the roads we’ll just increase pollution, particularly from slower and stationary traffic. Somehow we must restrict vehicles or we’ll never help people’s lungs.

It is not only our generation that has created pollution, however. When I lived in an industrial city we had “smog” – filthy air polluted by emissions from industry and from the coal fires prevalent at the time. A clean air act did a lot to improve that – although i’m not sure what fumes smokeless fuels gave off. We tackled that problem in a radical way – banning coal fires and requiring industry to install scrubbers and reduce nasty emissions. We will have to impose solutions on vehicle usage if we don’t do it voluntarily (which we wont). I doubt VED will have any effect whatsoever.

Put long distance freight on rail and distribute it by road at night in towns. Ah – noise complaints from the residents?

I agree, Ron. They should forget all the peripheral stuff (including engine size) and just add a few pence to the current fuel tax.

Big engine + low fuel economy + high miles covered = £££££
Big engine + low fuel economy + low miles covered = ££
Small engine + High fuel economy + high miles covered = £££
Small engine + High fuel economy + low miles covered = £

And all points in between.
Buyer’s choice.