/ Money, Motoring

How will the changes to car tax affect you?

Car monopoly

New Vehicle Excise Duty rules come into effect a year from today. Better known as car tax, the new rules will appear to some hybrid car owners as a cringe worthy April Fools’ piece.

In fact, as it’s 1 April, here’s a list of changes to car tax rules. Can you spot the April Fools?

  • New owners of eco cars will be charged hundreds more
  • New owners of CO2 heavy cars will be charged thousands less
  • A Bugatti Veyron and Toyota Prius will be subject to the same car tax rate
  • All cars over £40,000 will be charged an extra £310 per year, for five years
  • Some electric cars will be subject to car tax

If you’re not familiar with the new rules, you might be surprised to hear that all of the above are true.

But before I get started on explaining the ins and outs of the new car tax rules, please note that the new April 2017 rules will not be backdated. Only new cars bought after April 2017 will be affected (you’ve basically got 12 months to buy a low emission car that’s exempt from car tax).

The flat rate

Currently, Vehicle Excise Duty (VED) is purely based on the amount of harmful CO2 a car emits, meaning that any low emission car (100 g/km or less) is exempt from car tax.

After April 2017, all new cars will have two rates of car tax. In the first year of ownership, the rate is based on the amount of CO2 a car emits. But from the second year of ownership, the standard year rate kicks in – that’s £140 per year, for every car, regardless of how much CO2 they emit.

That means someone who’s bought a Toyota Prius that emits 70g/km of CO2 will pay nothing under today’s rules. But if they had bought it new after April 2017, they would pay £25 in the first year. Then with the £140 payments, they would have paid £585 in road tax by year five and £1,285 by year ten. That’s an awful lot more tax than the zero amount of tax you’d pay on any pre-April 2017 Prius.

But swap that Prius for a Subaru WRX STI, which produces 242g/km of CO2, and things get hazy. Under current rules, you’d end up paying £2,830 by year five and £5,280 after year ten.

If that Subaru had been bought after April 2017, you’d pay a whopping £1,700 in the first year but, thanks to the flat £140 rate, you’d only pay £2,260 over five years and £2,960 over ten. That saves them more than £2,000 by the tenth year.

So yes, future low emission car owners will be paying more than they were, and gas guzzling cars will be paying less than they were.

The £40,000 rule

After the first year rate, all cars that cost £40,000 from new will be subject to an additional £310 charge for five years.

Even some electric cars will be charged. Although electric cars will qualify as zero-emission vehicles and will continue to be exempt under the new rules, you’ll have to pay if the car costs over £40,000.

Electric cars costing over £40,000 will still be subject to the additional payment of £310 for five years. That’ll be a total of £1,550, despite zero CO2 emissions. Sorry, future Tesla owners.

Bugatti vs Prius

This is as close as we get to an April Fools. The first year rate is staggeringly different (£25 for Prius vs £2,000 for the Bugatti) and, unless somebody sells you a brand new Veyron for £39,999 or less, the Veyron will be subject to the extra £310 payment from years two to six.

However, when both cars reach seven years old, they will be charged the same £140 per year for the rest of their lives. So, they will at least end up on the same rate.

April Fools?

So no, this is no April Fools. This is all genuine and the new car tax rules are coming in next year.

Do you agree with these new tax rules? Will it make you buy a low emission car before 31 March, or will you be waiting for the change to happen to buy a CO2-chugging 4×4? (Or a Bugatti Veyron?)

Comments
Profile photo of DeeKay
Member

To me it shows just how little our Gov cares about us or the environment. . . I dont believe they ever did care

I got involved with autogas a number of years ago at a suggestion of Gov. . The whole 9 yards…Approval the works
What a disaster. . .Cost me a bomb. . I had no sooner jumped on the bandwagon than the Gov bathed it’s self in heavy oil (diesel)

I can safely say I have done my bit albeit I am not perfect but I have to have one of the lowest footprints of anyone living in the near sane/near normal world/lifestyle and I am still doing so and will I hope for many years to come

I know Gov’s has had a bit of a setback with the VW scandal showing up the true colours of heavy oil but what an about turn
VW can throw their EGRs etc in the bin because long term they mean nothing. . .No longer required. . Lets all go CO2 in a big way and boil the bloody planet and lets be quick about it
Maybe I should sell the place. . .
Get ourselves a big V8 diesel American RV. . .and not worry about anyone or anything because that’s the example I see here
Why worry about the cost of funerals or care homes, , blow the lot

I havnt read any more than the intro above but if that’s the way it is they’ll not have my backing next time around and over here that’s in a few weeks. . .

We have to change as a race, , ,as in human race not continue as was let alone back pedal which this is. .

Just my thoughts

Member
Bromley61a says:
2 April 2016

Sorry, it’s not really the Government, rather the liars and con artists at The Treasury – unelected, undemocratic and always (almost) getting their own way because THEY ARE PAID to do the sums with no-one to check on them – witness Equitable Life, Northern Rock and other rip-off fiascos.

Profile photo of John Ward
Member

. . . err, I don’t think you can blame the Treasury for the ruinous behaviour of the directors and management of those two institutions, Bromley61a. Their actuaries and auditors had a hand in it too I suspect.

Profile photo of alfa
Member

I don’t agree with free car tax. All cars use roads, roads have to be maintained, so all drivers should pay towards the upkeep, assuming that is why we pay car tax.

But there is no reason why there isn’t a basic rate car tax then a gradient tax on the amount of CO2 cars emit that could apply to all types of vehicles that use the roads. It would be much simpler than the intro and would encourage sales of lower emmission vehicles.

Member
Bobbie Dickie says:
3 April 2016

This is the most relevant and appropriate approach. Too obvious for elected members and their actors.

Member
elato says:
15 May 2016

……….and why should’t cyclists pay road tax? They use the roads and cause no end of delays etc!!!

Profile photo of malcolm r
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It has been the subject of debate. They would all have to be registered and given some ID on their bike; and how do you deal with children? It is after all a healthy pollution free occupation. We should promote it, shouldn’t we.

I do agree about delays when a herd of them ride side by side without leaving gaps for impatient motorists to seek refuge in when overtaking. But those delays don’t last that long, and anyway there’s probably a traffic jam, or a tractor, round the next bend.

Pedestrians also cause delays – crossing roads – and accidents – crossing roads. Perhaps they should pay a pavement tax (that might also help clear up discarded chewing gum and other litter).

Member
Bassmanandyt says:
24 May 2016

elato

I can’t speak for other cyclists, but when I’m commuting the 5 miles to work on my push bike, the car and motorcycle that I do pay road tax for remain at home causing no additional damage to the roads or environment. Would you care to argue on my behalf for a discount for me for all the days I cycle instead of using my car or motorcycle?

Thought not…!

Profile photo of malcolm r
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Bassmanandyt, well no one else gets a discount when they choose to walk, use the bus, the train or simply not go out in their car! 🙂 Just think of the fuel duty and vat you don’t have to pay on those days!

Profile photo of Ian
Member

Zero or low car tax for low emission vehicles is a sign that the government cares about the quality of the environment and the health of those living in urban conurbations. This move shows the opposite. I take Alpha’s point about road tax, but the amounts spent on roads in the UK AIUI fall well short of the total revenue generated by road tax. I’m fairly sure the motoring organisations have been campaigning for years to get more of the road tax revenue spent on the roads and this move simply ensures that our children will live in an increasingly polluted atmosphere – at least in cities – until another government or chancellor starts to comprehend the danger of CO2 emitting vehicles.

Profile photo of wavechange
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Raising VED for hybrid cars will compensate for the fact that their drivers contribute less through fuel duty. Electric-only cars still pay no VED, so make no contribution. Having said that, we need to move towards use of electric vehicles in cities, some of which have very poor air quality.

The link ‘Vehicle Excise Duty’ is to a Which? article on car tax bands from April 2015.
“The current VED bands will stay in place until 31st March 2017, whereupon major changes take affect.”
“These changes will not effect cars bought on the 31 March 2017 ….” 🙁

Profile photo of wavechange
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My point about affect and effect is that the wrong word is used in both cases.

Profile photo of DerekP
Member

For private cars, £140/year or 38p/day is a small amount of tax relative to the amount collected via fuel duty and VAT on fuel.

CO2 emissions are approximately proportional to the amount of fuel used, so those producing the most CO2/mile will be paying most tax/mile anyway.

Now that both MoT and VED records are all computerised, it is hard to see what useful purpose, if any, is actually served by the VED system.

If our current masters (sorry elected representatives) really do believe in “small government”, they could easily arrange to keep MoTs but scrap VED for all private cars.

There might still be a case for retaining VED for the likes of HGVs though – if these cause substantially more wear and tear to the roads.

Profile photo of DeeKay
Member

I dont agree with zero road tax for any vehicle. . However I also didnt agree with seemingly silly amounts small and large based on co emissions

CO emissions were not the whole story but another selling point for GOV just like this lot have the deficit on their minds and little else no matter who suffers and when they have messed everything up the next lot will arrive with equal zeal and be as determined to be at opposing poles as can be so really neither lot are worth their salt. . .No logic or loong term benefits. . . Just the thought of power
Best job would be to put them all in a big net and drop them off near the north Atlantic ridge

Cars with zero or £30 tax was bonkers. . . Many of these are now heavy smokers and anyone with a brain would have known this would happen but not those who read reports and data it seems

The emphasis should have been on the cleanest vehicles as in those that used cleaner fuels and that would require less after burn cleaning. . . The CAT has proved very reliable on petrol and lpg and on lpg has nearly nothing to do. . . .

Vehicles use roads and roads need money but there is only a % of road tax put back into the roads and as best I remember it may be below 50% so we are over charged on that front anyhow. . .Maybe some of you have that info to hand or remember better than I do.

Profile photo of John Ward
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The government seems to be making a simple concept far more complicated than necessary. The initial cost of a car should have no bearing on vehicle excise duty since that is reflected in VAT on purchase . There should certainly be both an incentive to run low-emission vehicles and a deterrent to using high-emission vehicles with a balance [the standard annual charge] applying in the middle range. Road fuel duty can be adjusted to reflect road mileage, vehicle performance and consumption efficiency but the government has allowed this to become a no-go area. We need a return to rational taxes and duties.

I am not sure how this will affect council parking permit charges for people in residential parking control zones. Many give discounts for electric and low-emission vehicles and charge much more for high-emission vehicles and the charges are linked to the VED rates. With these being thrown up into the air I suppose some new bureaucratic wheeze will be introduced piecemeal across the country. You would think on-street parking charges would be linked to the length of the vehicle in the first place with an adjustment for emissions based on standardised figures.

It should be borne in mind that owners of electric vehicles are paying high taxes and levies through their electricity bills even if they charge them on an overnight tariff. Running an electric car might justify investment in solar panels for those whose properties are suitable and maximising the export of electricity during the daytime to cross-subsidise the consumption of power overnight for recharging. Perhaps Which? would like to commission some calculations.

Profile photo of DeeKay
Member

You have a few good points John
Electric cars do not run for free. . . There is not much tax on electric unlike road fuels but you have your costing idea right in that electric per kwh is not cheap when compared to kwh from fossil/diesel/petrol/gas unless of course you can use the free charge points and they will not last.

Do Gov’s ever do anything simple John
They like to make a fuss about everything, ,Thats their idea to seem to be solving a problem that often doesnt really exist

I have a borehole (we once used a spring well) and everyone thinks it’s great to have “free water” but I had to pay for the bore and equipment and the power needed to pump the water plus a filter every six months. . . .It is not free. . . . Electric cars are not free, ,actually pretty expensive and the power is not free.. . .
Give me a little Fiat on lpg any day and I’ll be happier with that

Profile photo of John Ward
Member

Taking the 5% VAT and the government impositions on electricity bills together I think electricity for vehicle charging is quite highly taxed, the additional iniquity being that the VAT is applied on top of the other government levies.

It has sometimes occurred to me that with a combination of flywheel technology, batteries, and wind turbines on the roof cars could travel on free power in hilly terrain. I have no understanding of the mechanics and dynamics involved so it will probably remain a pipedream. A major drawback is that the Treasury would have to look elsewhere to offset the tax revenue loss.

Profile photo of DeeKay
Member

I know we need money to run our country but I question what Gov actually does with the vast amount of tax and levies they collect

Yes there is 5% vat on electric and some impositions but nowhere near what we are led to believe of late when our Gov decided to abandon renewable’s more on international political grounds than logic
Search the BBC news site for renewable’s and you see it’s just coming good so why walk away from a good source. . . .Keep at it to we have enough to have to switch some off when not needed. . . There is no over capacity, ,there are switches

Petrol and diesel has 59.95ppl of duty after oil company price but before retailer price which then has 20% vat on top. . . .There would be some duty to add to electric before it would come near this lot as a revenue stream
I’m not anti electric. . .Electric has the best potential but is some time away in the levels needed for additional fleets of vehicles
Malcolm is correct that city traffic needs to seriously reduce but I’m a realist and I dont know how to get people to sit still. . . People love the feel of power and movement and they’ll not part with it easily
Many cars on the road have in excess off 100hp and many in excess of 200hp .. . .What real need is there for this

We need to change but we dont like change and our Gov and business minds can only think of expansion which has not been sustainable for years
I dont think in all honesty we will change before we are on our knee’s begging for food and water and that will be too late for many if not most
All the top brass will be somewhere with the best chance of survival but I dont think they’ll have the wit to survive because they dont have the know how. . . .It’s not easy growing food from a book

Now I’m probably out on a limb with that but I’m not left of centre so dont hit me like a load of lead. . I’m stating what I see and I’ve been interested in this for most of my life and have worked with energy production near all my life plus I was brought up on a farm and know a few things there also
There is no simple fix

Profile photo of malcolm r
Member

VED is not the only tax motorists pay, and by far and away the least significant. VAT on a new car will penalise the Bugatti owner by around £200,000 (or more realistically a BMW 5 around £8000) whereas a small car might be nearer £2000.

Fuel consumption (and thus pollution) will cost the big car owner far more in vat and fuel duty – possibly 5 times as much as a small car.

However pollution depends upon how much fuel is burnt, so upon how many miles you drive. It therefore seems much fairer (to me) to have an ongoing tax that reflects this, and taxing the fuel you buy achieves this. VED is not pollution-dependent in practice – your Bentley might sit in the garage for most of its time and just pollute when you go to the races.

As for electric cars, they do pollute through emissions from power stations. but, more importantly, as they become more popular they will place an increasing load on our already-overstretched generators. So if we are not careful there will be power cuts for the vulnerable while the environmentally-friendly car owners recharge their vehicles for their next commute.

You need to look at this problem in the round. And, if you want to reduce pollution in town and city centres, the most effective way is to reduce the number of vehicles using them, and the time spent blowing out poisonous fumes in traffic jams, by introducing real restrictions for non-essential traffic.
:mrgreen:

Profile photo of John Ward
Member

Absolutely right Malcolm. To improve our quality of life we have to make our towns and cities seriously unattractive to car users and strictly control commercial movements unless less-polluting traction is available at an economical price.

Electric powered tugs [as once used at railway termini] could haul a road train of several vans and light goods vehicles, or demountable containers, from the outskirts into drop-off points where stores’ own electric carts and floats [as once used by the Post Office and dairies] could collect their inwards goods. For a better future we might also have to look to the past.

Member
dermot0 says:
2 April 2016

If car tax is really about providing a good quality road system rather than raising money for the government’s coffers, then owners should be taxed according to use. The reasonable way to do this is to do away with road tax altogether and put the tax on fuel – that way those who burn more fuel will pay more tax and those who use the roads the most will also pay more. In addition there should be no effect on car sales and production so an important industry will be safeguarded. Is this too simple and logical for politicians to understand ?

Profile photo of John Ward
Member

Not only that, Dermot0, it would create an incentive to develop much more efficient engines as well as making people pay fairly to use the air conditioning which chucks more hot air back into the atmosphere.

Profile photo of DeeKay
Member

John, , you and are on the same page on this. .
Use cleaner fuel and the tech we have to do as good as we can now not b****r about with tax rates. . .unless your going to reduce tax on real time cleaner combo’s

Air con only shifts existing heat from the inside to the outside but wastes lots of fuel to drive the pump

Profile photo of John Ward
Member

Yes, DK, I realise that, but most drivers I know use the aircon when it really isn’t necessary and set far too low an interior temperature. Even when it’s 30 degrees outside you only need to take it down a few degrees to feel comfortable inside – and cars still have windows and ventilators! It’s hard to take people’s hard-up stories seriously when you know they’re driving around with the aircon on in mild but not warm weather.

Profile photo of wavechange
Member

Many drivers have the air conditioning on throughout the year, whatever the weather. I would not want to drive a car without aircon, but mine is used selectively.

Profile photo of John Ward
Member

Being selective in the use of all energy is the key to economy and ultimately protecting our natural resources. I agree on not wishing to drive a car without air conditioning: there are safety advantages in reducing the interior temperature on very hot or humid days as a comfortable climate in the car can prevent driver fatigue, discomfort and concentration lapses. It can also contribute to passenger calming.

Profile photo of John Ward
Member

As a matter of interest, are electric cars powerful enough to support air conditioning while achieving satisfactory speeds? I have no direct knowledge, but I suspect it would severely limit the available range from an overnight charge.

Profile photo of wavechange
Member

That’s a good point, John. Air conditioning just pushes up fuel consumption in a conventional car but where the power has to come from batteries it is a much more important consideration. Perhaps we can have some input from those living in warmer countries than the UK.

Member
Jack says:
25 March 2017

Couldn’t agree more, I’ve been saying the same thing for years!

Member
Robert says:
2 April 2016

This all goes to show that politicians can not run a business as they do not understand the principals of business, and to try to solve a problem do they use a simple solution NO they just make it even more complicated and expensive.

This is the problem with career politicians they do not have the brains they were born with and how the hell they managed to get through university I don’t know.

Put the duty on the cost of fuel so if you use it you pay for it, as for electric cars fit a meter which registers how much electric it uses from the national grid and charge appropriately.

Simples

Member
Brian Pull says:
2 April 2016

So called ‘Road Tax’ has has nothing to do with roads, little to do with the environment and is merely a revenue source. Leaving aside the inefficiencies of governments and the political elite of both hues (none of whom seem to be from planet earth), tax clearly has to be raised, but this seem a particularly bad way to do it.

The simplest method of raising revenue from road use (assuming there is justification in so doing) is surely via fuel. The more you use, the more you pay. This is not only fair and proportional, but also encourages energy efficiency. And the simplicity of not having a Road Tax system to administer (or worry about as a User) is a further bonus. But hey, why simplify something when you could spend time complicating it?

And whilst I am (extremely!) unlikely to buy a car in excess of £40k, why is there a Road Fund tax element to such a purchase? Fortunate people able to buy these vehicles are already paying extra in VAT, so why the arbitary ‘supplement’? Any also why for five years?

As with many tax proposals, it is unfair, over-complicated and unneccessary. But that’s politics for you!

Profile photo of Adrian Porter
Member

I agree that it’s complicated, and I have no idea why there is a supplement to any car that costs over £40k – perhaps it has been decreed somewhere that cars over £40k are in the luxury sector?

However, while you may not buy a 40k car brand new, what about a three year old car that’s lost, say, around 60% of its value? Might you be tempted then? But – if the car was bought originally after April 2017 and cost over £40,000, and that car is sold after three years, it will still have three years of the supplementary £310 road tax left, so nearly an extra £1,000. Would that put you off? It’s not just new car owners that will feel the affect of this, I think the used car market will change as well.

The impact on the second-hand market won’t stop there. Imagine weighing up buying a Prius, or other hybrid or low emission car, that was new in 2016 vs one that was new after April 2017. Even if the 2016 has two hundred pounds worth of damage to it, you’ll make that money back in two years by not paying the £140 per road tax that would have come with the 2017 version.

It’s the other way round for CO2 heavy cars. A 2016 version will have much higher road tax than a 2017 version. (Any car that emits more than 141g/km will have a lower tax bill under the new rules than the current ones.)

In other words, on the second-hand market, older low emission cars will potentially become more attractive than newer ones, while newer cars that emit large amounts of CO2 will become more appealing than older ones. The latter may potentially lead to more cars being scrapped earlier than they would have been, as the idea of paying £500-£515 per year on tax under the pre-2017 rules, when you’d pay £140 on cars originally sold after April 2017, would be quite unattractive.

Profile photo of John Ward
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Is Which? writing to the Chancellor to protest about this blatant inequality?

Member
D Berry says:
2 April 2016

Put the tax on fuel ……. the more you use, the more you pay.

This penalises gas guzzlers, high mileage users etc and is fair to everyone as it is based on actual usage.

Member
Fairforall says:
2 April 2016

I’d love the idea of having just the tax on fuel the more you use the more you pay…I’m really up for it . Not fair to those who are on low salary who have to do a lot of miles to there place of work. But I can’t help thinking the extra costs would affect the goods you buy where the goods transportation costs would rise, giving excuse for all goods and food to be price hiked. But on the other hand would the distribution companies offset to this by not paying the VED? or could they get special less fuel tax as a distribution business.
By the way I don’t travel far to work , nor am linked to any business involving distribution.

Member
Robert says:
2 April 2016

As fuel and road tax is all part of the running costs of the vehicles a transport company use they are able to put these against any company tax as part of their running expenses, also the road tax for commercial vehicles is substantially higher than any private road vehicle so would probably only make a small difference if changed to paying at the pump.

As I’m not in the haulage industry I could be wrong on this subject.

Profile photo of alfa
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There have been several comments to suggest just taxing fuel so those who do the mileage pay the most.

I see a major flaw in this. The price of fuel will go up, people will start complaining, and the likes of Which? will start campaigning to reduce prices.

Member
KeithB says:
5 April 2016

The price of fuel will go up, but with zero road tax, so for some average users it will balance itself out. If you use the car / lorry a lot then you should pay more to maintain the roads you are driving on IF that is what road tax is used for? With the state of the roads around me I suspect it is either being used to support the benefits system or the EU.

Profile photo of malcolm r
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alfa, not just those who do the mileage, but those who have high-consumption cars. It seems fair to me; most pay for consumables depending upon how much they use, whether fuel, energy, water, so it seems reasonable for those who use the most to pay the most, including taxes. It might persuade some people to be more careful about their choice of vehicle, and the journeys they choose to make. That will impact on pollution levels and carriageway maintenance which must be all to the good?

Member
Jean Sokell says:
5 April 2016

I am flabbergasted!! It couldn’t be more complicated if it tried!!!

Member

I really do not understand why the Government continually move the goal posts regards VED.
Just make everything more complicated or is this just some idiot trying to justify their obscene wage and pension
Many years ago a fixed penalty oops sorry – VED figure was applied to, Agricultural Equipment, Plant Equipment, Mobile Cranes, Motorcycles, Cars and of course Commercial Vehicles in there many configurations.
Everybody knew what they were going to pay before they purchased their chosen transportation.
We all got a piece of paper (Tax Disc) that was placed/fitted to the nearside windshield and we all knew who had taxed their vehicle. [Unlike now – unless the Police (Now much reduced) use Number plate recognition cameras, we do not know who is taxed – No Tax = NO Insurance]
I think we should also bring back the ” Tax Disc ” + An Insurance and MOT (If required) disc as this would show instantly who was within the basic law regards their vehicle.
My Father over 45 years ago was saying VED should be included in the fuel tax, so those who used more fuel – paid more VED

Profile photo of alfa
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We have left our tax discs on our cars as a reminder of when they are due as the month does not change.

I forgot to MOT my car last year and was horrified to find I had been driving illegally. I wonder how many illegal cars there are on the road because people simply forget to renew as no reminders are sent out. A simple email would do.

Combining road tax with an MOT would make life a lot easier. New cars don’t need an MOT but there are plenty of new cars on the road with faulty lights, and they could be given a basic check to make sure things like lights, indicators, wipers and horn work before issuing road tax.

But that would close down more Post Offices so is not a solution.

Profile photo of DeeKay
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In Northern Ireland we not so long since had both tax and mot disc’s. . . Both were scrapped at the same time as the UK wide tax disc
We do however get both TAX and MOT reminders via the post about 6 weeks prior to the expiry date
Our MOTs are done in Gov owned and operated (DVLA) MOT centres. . The same one’s that do PSVs etc unlike the rest of the UK. . .

Still there are records on a UK wide database so why there are no reminders I dont know. . . Perhaps our lot who always had to be doing things here differently had cornered themselves by the introduction of an MOT disc and once it was to be done away with perhaps felt obliged to send out reminders

Perhaps Which would have a look at this as the majority of the UK seem to be at a disadvantage on this front
It’s not often one has the chance or need to campaign on behalf of such a huge majority so surely a service that 1.75m of our population is getting can be rolled out to the other 65m odd

Profile photo of alfa
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I agree DeeKay that this is something Which? could campaign for.

So how about it Which? Car drivers need reminders for tax and MOTs.

Profile photo of DeeKay
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Thanks Alfa, ,

Member
Derek Gill says:
6 April 2016

Try taxing bicycles, horses, mobility scooters etc. Fine horses/riders that foul the highways, collect all outstanding fines for offences from foreign embassies and motorists. The list goes on. Alternatively government could raise /steal more of our money by cutting foreign aid and limiting their own expenses. The car owner should NOT be used as a cash cow

Profile photo of John Ward
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Some time ago there was quite a divided Conversation here about registering, number-plating, and taxing bicycles. with strong opinions on both sides. It would be a brave minister who put that forward. Imposing compulsory bicycle insurance for injury and theft would be a sneaky way for the government to get revenue via the insurance premium tax.

There are very few horses on our roads these days and the effort of tracing them and ensuring they have been taxed would outweigh the value of the tax. It’s better not to restrain the keeping of horses but to quietly capture the ever-rising revenue potential through the VAT paid on frequent vets’ and farriers’ bills and on other equestrian necessities. Racehorses, of course, have the potential to generate huge revenues indirectly through the racing and betting industries and there is a huge VAT take as well through their management and maintenance.

As for mobility scooters, I think that would be seen as a tax too far. Their impact on our roads is minimal and since, in most cases, they are entirely privately funded, they take a burden off the government in terms of alternative mobility provisions for disabled people.

That leaves the CD-plated cars that commit parking contraventions. Because of international protocols the UK could not unilaterally enforce against foreign embassies’ vehicles and drivers. Most missions either do not commit contraventions or pay their penalty charges but there are a handful of persistent offenders and maybe the best way to constrain them is to remove their vehicles on the grounds of highway and traffic safety. Recovery would have to be free but the inconvenience would be costly.

Profile photo of Ian
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More evidence is emerging that CO2 emissions, which continue to increase, are also silently injecting extra carbs into bread, cereals and salad, while the protein and minerals in food take a hit.

From New Scientist:

“This nutritional cost of changing Earth’s atmosphere is now worrying the world’s most powerful nation. For the first time it is a key finding in an official report on health impacts of climate change in the US, unveiled by the White House today.

Why would more CO2 mean poorer food? Photosynthetic organisms, such as plants, are the carbohydrate factories of the world. They convert CO2 and water into gigatonnes of starch and sugars every year. And every year, since the dawn of the industrial age, humans have been steadily feeding them more and more CO2.

Plants respond by building more carbohydrates but less protein into their tissues. The result is a higher ratio of carbohydrate to protein in most plants, including major crops such as wheat, rice and potato.”

Thus the carbohydrates in previously healthy foods are increasing, while the essential minerals and vitamins appear to be declining. Over time, this will increase obesity, since diets rich in carbs but low on protein and essential nutrients, previously a problem confined to developing countries, leave consumers feeling hungry, so they eat more.

The action of the Government in choosing to ignore low emission vehicles through the VED system is already seeing sales of the most polluting cars rocket. Consequently, even more CO2 is being pumped into the atmosphere, with the knock-on effect that malnutrition and even more obesity could soon become a malady in the UK.

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A very worrying scenario, Ian, and a further powerful argument for preserving and rebuilding the world’s forests as the primary absorbers of CO2. Naturally, not emitting it in the first place is the prime objective and we have come to accept fiscal policy’s role in this. To turn that on its head now is very irresponsible. Did the Treasury spot it and say nothing, or did the Chancellor deliberately overrule them for cynical political reasons, or did it emerge through general ignorance?

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steve says:
6 April 2016

all vehicles should be taxed the same amount no matter what size engine or type as they all use the same roads !

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UK says:
6 April 2016

I always thought that Osbourne and his cronies were mentally disadvantaged, this proves it

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All cars should pay the same amount of tax as they all use the same roads!

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

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…and bigger cars take up more road space

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

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C Read says:
11 April 2016

I see the words Road tax slipped in, motoring journalists just can’t help themselves can they? At least the main points in the article say VED or car tax.

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

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Hi all, we’ve rounded up some of your views on the new car tax rules here: https://conversation.which.co.uk/motoring/new-car-tax-vehicle-excise-duty-debate/

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Dorothee says:
10 May 2016

What another old lot of Government bunkum … Why make anything easy when you can spend thousands of tax payers money on over complicating a situation that should be fairly straightfoward!!

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Can anyone suggest why a car costing £40 000 plus is penalised with £310 a tear extra tax for 5 years? What has that got to do with pollution or anything else?

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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.

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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.

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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.

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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?

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£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.

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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

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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.

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

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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|?

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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.

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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.

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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.

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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.

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I have always believed that taxing a heavy gas-guzzling car, at a higher rate, is wrong. Heavy cars give more protection in the event of an accident than a small ‘green’ car. You cannot change the law of physics on that. Taxing the big heavy car is to impose a tax on personal safety. The leaders of our society encourage us all to use small ‘green’ cars, but they themselves never drive such cars. They do not lead by example and for obvious reasons.

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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.

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And don’t forget the cyclists and motorcyclists.

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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.

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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.

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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.

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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.

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Dave3 says:
14 May 2016

Re. the earlier discussions about the environment, I feel that the Government could and should make a positive contribution to better air quality by removing the ability of most VAT-registered businesses to reclaim the VAT on the purchase of commercial vehicles (and a smaller number on the purchase of cars) and on fuel purchases, and should also remove the ability of businesses to offset the purchase of vehicles and fuel against tax liabilities.
Controversial, I know, but when you’re next being overtaken by a heavily-loaded arctic, spewing out particulates, do you think the owners or drivers are particularly worried about fuel consumption, when they can do such offsets? If they were hit on the bottom line, then they may perhaps be more interested in better use of fuel and in pushing manufacturers to produce even more efficient vehicles.
Yes, the cost of all goods and many services would probably rise, but how can you put a value on better health? I assume that the NHS is already spending a lot of money on the effects of vehicle pollution.
The basic argument here is whether or not people (including all politicians, who have the power to make the rules) give a toss about the future of their children and grandchildren. I don’t have any kids, but still believe that we should try and minimise our effect on the environment. Unfortunately, recent events (e.g. VW) demonstrate that vehicles manufacturers have been able to exert far too much power on political decisions, for the sake of their bottom line. I’ll shut up now, although I feel there’s a book somewhere….

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

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TCS says:
14 May 2016

Got a new car costing over £40k on order already, so escape the £310 charge from 2017-get in!! So lucky!

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Ron says:
14 May 2016

What bloody idiot thought this scheme up, we might as well go back to the old style of road tax, on engine size it was simple and everyone understood it

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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.

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Janet says:
6 June 2016

I have a hybrid car. Does the change only affect brand new cars made after April 2017? How does this change affect hybrid cars made before April 2017? Or does the age of the car not matter?

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Any money brought in by road tax and emission related charges should go towards a plan to reduce co2 globally.
Worrying about London or England alone by installing “average speed check” zones or ULEZ and LEZ, CC, (whatever next) as if there are some sort of imaginary skyward borders that pollution and ozone damage somehow adheres to must be some sort of sick joke that most people are unbelievably actually falling for!
We are minuscule in our carbon footprint compared to the rest of the developing world but that notion is bad for business so our politicians will just play dumb and ignore the blindingly obvious.

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Rich Mckenzie says:
8 November 2016

Hello, can any comment on how this will effect commercial vehicles purchased after april 2017??

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Colin Halton says:
19 March 2017

How about a standard charge stepped in relation to the physical size of the vehicle plus a premium added according to the amount of pollution produced by the vehicle?

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The solution is in my post below Colin. Forget the size of vehicle (engine and/or physical size) and pollution. These are totally misleading confusions when it comes to “Road Tax”. Someone’s personal choice of vehicle will be affected by the fuel economy and miles covered, and thus the amounts of fuel they will need to buy. Pollution is important, especially that caused by diesel, but this is an issue that should be properly reviewed and considered separately from the vehicle tax.