Car Tax Rule Changes This April: What You Need To Know
As of April 1st, the Government’s latest changes regarding the taxation of motor vehicles (Vehicle Excise Duty) is set to take effect. Long having been in the pipeline, this new legislation is intended to encourage the purchase of more environmentally-friendly vehicles, whilst clamping down on those big polluters that cause such extensive damage to the air around them via their CO2 emissions.
Under the current laws, vehicles are taxed depending on their weight and in the case of trucks and lorries, their number of axles. The larger and heavier the vehicle, the higher tax bracket they fall into as the amount of petrol burnt to move such a cumbersome load is far greater than that of anything else on the road. Exceptions are of course made for those larger vehicles that serve a communal function such as ambulances, fire engines, and even some agricultural machinery, but by and large the rule has been ‘the bigger the vehicle, the greater the level of taxation’.
However from the moment the month of April begins, all new vehicle purchases will now be taxed based on their level of pollutant gases, at least for the first year after their acquisition. Once that first year is up though, subsequent levels of taxation will be dependent upon what type of vehicle is being assessed. Looking at the official publication, we can see that petrol and diesel vehicles will both cost an extra £140 a year, alternative fuel ones will require £130 annually, but electric vehicles with zero emissions will require no extra payment whatsoever.
On top of this, if the vehicle in question costs more than £40,000 and emits any form of pollutant gas, then the new owner will have to pay £450 per annum, with an extra £310 added on top of the aforementioned tax. This additional levy goes on for six years.
Yet those ‘clean’ means of transportation that cost greater than £40,000 still have to pay the additional £310 fee for five years after their purchase, as the listing price evidently remains an important factor in determining tax brackets. Such a decision all but equates even the greenest of high-end vehicles on par with ‘B band’ polluters, those that spew between 101-110g/km of CO2.
Ultimately, it would first appear that these taxation reforms are designed to encourage the purchase of cheap and clean vehicles, whilst penalising those who want to splash the cash. Yet if you can overlook the initial vast outlay, high-pollutant vehicles will potentially break-even over time, as the level of tax eventually begins to decline once the six year period mentioned earlier is up.
As for why this move has happened, is a matter for debate. One theory is that the Government simply wishes to bolster its revenue, by taxing a road using demographic that previously has not been paying any tax due to EU regulations which have already reduced emissions. Alternatively, it could be argued that a tax on all vehicles is vital as even electric cars still have their harmful effects. The electricity they use has to come from somewhere, which in turn necessitates the burning of more fossil fuels.
For dealerships though, there is likely to be a rush of new buyers looking to make their purchase before these new measures can take effect. Although some may benefit after a number of years, post-March will require greater spending on the part of all consumers, regardless of how environmentally friendly you want to be with your money.