Financial Matters
Road Rage : increasing the taxes paid by some of the lowest polluters
New rules for Vehicle Excise Duty tax bands are applied from 1 April 2017 that will add £500 or so of tax to the long term ownership costs of some of the most eco- efficient cars on our roads.
Very little tax is currently applied to cars which emit 130 grams of carbon dioxide per kilometre or less, and none at all to cars producing 100g/km or less. But this all changes with the new 2017 rates where any new cars which produce just 1g/km or more will pay an annual flat rate of £140.
In addition, there will be a new supplement of £310 per year on cars costing more than £40,000 - even on zero-emission electric cars. This will be payable for the first five years the car is subject to the new standard rate of tax - or in other words, from the second to the sixth year of the car’s life.
How this affects a new car buyer depends on how eco-friendly a car they wish to drive, and how long they plan to keep it. Generally speaking, the more eco-friendly the car is, and the longer you plan to keep it, the stronger the case for buying or leasing it before the 1 April 2017 deadline.
And if the car you plan to buy costs more than £40,000, make sure you get it bought and registered before 1 April 2017 – unless it’s a real gas-guzzler that you hope to keep for well over 5 years, where you might see the rules shift in your favour.
eg The Ford Mustang Fastback V8 is best purchased under the forthcoming road tax system. This ensures road tax for the first 5 years totals £2,700 (based on emissions of 299g/km and a list price £33,995). The cost under the older system totals £3,625.
A motorist who plans to minimise cost has to consider the best time to buy. Remember that a car with emissions up to 100g/km can currently be taxed for free (year 1 and subsequently). Countless vehicles sit in this category including sports cars.
26 | SKWilmslow - March/April 2017
The BMW i8 – a supercar that hits 62mph in 4.4 seconds – qualifies as its emission figure is 49g/km. However, from April 2017 road tax costs £10 in year 1 then – as the list price is more than £40,000 - £450 from years 2 - 6. The total cost throughout the first 6 years is £2,260.
So rather strangely low emission, low polluting cars are about to feel the taxman moving against them while the proud would- be owners of sub £40,000 gas guzzlers save money under the new regime.
By the time you read this the deadline will be fast approaching so put this down and head to your favourite car dealership now.
Peter Bevan
Bevan & Co, Chartered Accountants
peter@bevan.co.uk
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