Changes to new vehicle excise duty (VED - commonly known as road tax) come into effect for new vehicles taxed from 1st April this year.
And the unwary are in for some unpleasant surprises – over the next five years! The government would have us believe that additional monies raised will be reinvested into much needed road repairs, little comfort to sceptical car owners. However, the pain can be minimised if you choose your next car brand carefully.
The new system taxes the car in year 1 based on its emissions, essentially, the “dirtier” the car the more you will pay in year one. Then a flat rate road tax of £140 annually applies from year 2 onwards. Going forward only zero emission vehicles are exempt (eg electric cars) - small engine city cars are now dragged into the taxation net.
However, buyers of cars above £40,000 list price face real pain. They pay year 1 tax based on emissions, then in year 2,3,4 and 5 will pay an additional £310 per annum over and above the new standard rate of £140. That’s a whopping £1800 in road taxes from years 2 through 5 and will impact hard on sales of high end vehicles, particularly moderate mileage users.
There are no short cuts to get round this new luxury class – the £40,000 is based on list price, no matter the discount negotiated, the tax remains punitively high. Factory accessories fall into the tax band calculation – so think twice about satellite navigation and other “must have” extras.
All is not lost, however! Japanese manufacturer Subaru’s entire range of vehicles sit well below this new important £40,000 threshold. Buyers of their luxury SUV’s such as Forester and Outback will enjoy superb equipment levels and avoid the new premium through years two to five. Subaru’s industry leading Eyesight safety technology collision avoidance system is standard on Outback Lineartronics and now comes fitted on 2017 Levorg.
Load every conceivable extra to your wish list on any new Subaru and you still come in below the £40,000 banding (and have their wonderful AWD petrol or diesel Boxers to enjoy on your daily commute).
Spare a thought for the driver of the German car behind you – he will be quietly fizzing at the thought of paying for your share of road repair bills!
The new changes only affect cars – if you drive a pick-up on the farm you continue to enjoy the simple commercial vehicle tax Band and of course the additional fiscal benefits that allow you to offset not only the entire purchase price against your tax bill, but also recoup all running costs and VAT associated with these vehicles. (If you’re unclear on how this works pop into any of your six Northern Ireland Isuzu Pick-Up Professionals – they employ specially trained advisers to keep you fully informed of taxation, and the all important towing benefits of choosing an Isuzu D-Max). Be sure to say Farming Life sent you!