Warning! Government Car Tax changes could be detrimental to your wealth! It is probably a little known fact that with effect from 1st of April the department for transportplans to introduce substantial changes to the VED (Vehicle Excise Duty) or car tax as we all know it. According to the government in the outgoing car tax system most new car buyers where paying very little or nothing at all in the way of road tax which as a result has been costing the government millions of pounds each year
Whilst most people will think that it’s just an increase in the amount you pay every year, but there is more to it than that. Firstly the current car tax scheme is based on Co2 emissions (the more emissions your car emits the more you pay), the new scheme will stay based on the same principle but only completely zero emissions cars will be exempt from paying anything at all (BMW i3, Nissan Leaf…) whereas currently low emission cars like the Ford Fiesta or Skoda Fabia for example are tax exempt, the change will see these cars having to pay a substantial amount. For example the Ford Fiesta 1.0 Zetec is currently completely free but if you buy a new one from the 1st of April you will have to pay £120 in the first year and £140 a year after that. Not only will there be an increase in the yearly tax you pay but also there will be an added premium for cars that have a list price of over £40,000. These cars will have to pay an extra £310 a year regardless of their emissions. This is bad news for anyone wanting to buy a Tesla model S, the emission free car is tax-free but because it has a list price of over £40,000 you will have to pay the £310 premium every year.
How can I avoid the increase in car tax? Well the simple answer is if you’re looking to buy a new car then make sure you buy it before the 1st of April. Other wise there are ways to avoid paying the tax. One way of avoiding the tax would be to look at finance options at Credo we can offer low rate finance and we can help you out to spread the cost monthly. The second hand market is also another good option. A lot of cars on the used market aren’t actually used, they’re called ‘pre-reg’ a pre reg car has already been registered by the manufacturer so even though the car may be 6 months old it will have likely done a few hundred miles by the dealer and is virtually brand new!