Radical overhaul of car tax set to hit motorists hard
Walk into any new car showroom these days and you see displayed next to the glistening motors a fact sheet about performance of the vehicle, economy and CO2 emissions. Most of us are sold on the shiny motor, how it looks and feels and don’t really give a second thought to what road tax will have to be paid. Maybe we will decide whether to purchase a petrol engine model, diesel, electric or hybrid, but that’s as far as any thought process goes about performance.
Take a trip around any major city in the world and you will be acutely aware of the pollution levels caused by vehicle emissions. Bangkok, Thailand where they have little control over vehicle pollutants is in the news presently for having dangerously toxic levels of poor air caused by traffic emissions. There have been reports too about London having record high levels of toxins in the air, notwithstanding that congestion charging has cut the flow of traffic to the city.
Different governments around the world have attempted to tackle air pollution caused by vehicle emissions in different ways. In Paris for example, there have been periodic wholesale bans on vehicles entering the capitol city to improve air quality. Air quality control is very much on the political agenda worldwide since there are international agreements that commit national governments to ensure drastic improvements.
Until comparatively recently, the UK government encouraged the use of diesel cars since these were seen as being more fuel efficient. That may be true, but they also in the main emit greater pollutants to the atmosphere, which is the reason why there has been a complete about turn in government policy to dissuade purchase of these vehicles. Moreover, diesel buses are cited as the main reason why London is so heavily polluted with air quality being noticeably improved during recent bus strikes.
As a consequence, we are now seeing far more electric and hybrid vehicles, but these are not so popular with consumers since the purchase cost tends to be higher, and there are compared to traditional fuelled vehicles performance issues.
Everything is however about to change. When looking at purchasing a shiny new motor, more thought needs to be given to how much tax you will have to pay. Complex bandings are about to be introduced. In summary, the general proposition is that the lower the CO2 emissions, the less tax you will pay. Own a car with zero emissions ie an electric car and the banding starts at zero – in other words you pay no road tax. Own a high-powered diesel car and you could soon be paying £2,000.00 car tax annually. The general proposition is that the level of tax will depend on type of fuel with electric & hybrid powered cars paying less but petrol and diesel powered cars paying more. Owners of luxurious motors costing over £40,000.00 to buy will be hit with the highest rate of tax.
And there’s more. The EU and national Governments control how cars are made and set regulations about how much emissions can be tolerated. If a proposed model does not meet the criteria it will not be allowed on the roads. Think about the Volkswagen emissions scandal. To fit their vehicles into certain classes they had to prove that they met the tough criteria. They could not, so they cheated by falsifying records.
If you own a diesel car, or are planning to buy one for fuel efficiency, most new models are fitted with a diesel particulate filter (DPF). The DPF acts to reduce emissions thereby will indirectly lower the car tax you pay for such a vehicle. However, a DPF will sooner or later clog as this accumulates soot. The cost of replacing the DPF varies by make and model, but typically between £1,000.00 to £3,500.00. So you may have saved significantly on fuel spend, but will lose out in the long run by having to replace your DPF. A temptation might be to just remove the DPF altogether. Doing so will also enhance the performance of your car and lower fuels costs. However, do not be tempted to do so. There is now a hefty fine for removing a DPF and running a diesel car without one. Moreover, it is also illegal for any garage to do such work for you.
Another tax issue that affects owners of cars bought and registered abroad is when the owner has to pay UK road fund tax. The law is that once your car has been in the UK for 6 months you must register, tax and insure the car here. If you fail to do so you are committing an offence. Moreover, UK police have the power to seize, remove and crush any untaxed or uninsured car. Since it is estimated that over £60m tax annually is lost on the 350,000 or so foreign registered cars on the UK roads you can see why there are regular crackdowns on those who do not comply with the law.