Majority of British drivers are unaware of car tax changes that will mean a hike for most new vehicles next month
The majority of British drivers are oblivious to the fact that car tax is changing from April 1.
As of next month, almost all new cars will be subject to annual tax band price revisions, escalating as high as £2,000 in the first year of ownership for the most polluting models.
This will hit 17-plate cars bought from April and greener cars that are not zero CO2-emissions electric and hydrogen-powered vehicles will bear the brunt of the new rules.
They will see all other cars pay a standard tax rate of £140 a year – but with a £310 premium rate surcharge added for cars costing more than £40,000 for five years after the first one of ownership.
Car tax is taxing: Just 11 per cent of drivers understand the VED car tax changes coming into play next month
Only buyers of lower and mid-range pure electric and hydrogen models that emit no CO2 from their tailpipes will not feel the impact of the changes, with these vehicles remaining free to tax as they are under current laws.
But for all other cars, there’s going to be a change – and there’s a greater chance of it becoming more expensive than cheaper for motorists.
Meanwhile, those buying more expensive cars will find that they get hit, even if they are pure electric. Cars with a price tag above £40,000 will pay an extra £310 premium surcharge for five years after the first year.
Drivers have to get their skates on if they want to beat the new rules which come into play in 17 days’ time.
We’ve recently told you which popular 17-plate models are available with the biggest discounts and which ones can be had on zero per cent finance to help you get a deal over the line before the March 31 cut off.
But this latest study has discovered that many drivers are none the wiser about the forthcoming changes.
According to research by insurer Confused.com, 61 per cent of motorists are unaware of the new car tax laws taking place in a fortnight’s time.
Even more concerning is that just 11 per cent of the 2,000 drivers surveyed said they fully understand the new rules, meaning almost nine in 10 aren’t alert to a potential tax burden they could be hit with next time they want to buy a new car or a used model registered after April 1 2017.
According to the study, not enough has been done to raise awareness about the issue.
That’s what 79 per cent of people quizzed said, claiming the switch to new rates hasn’t been well publicised.
Research by consumer site HonestJohn earlier this year estimated that seven out of ten new car buyers will pay more tax from April, with the revised bands adding more than £500 to the long-term running costs of Britain’s most-popular and eco-friendly new models.
With the changes to Vehicle and Excise Duty now just around the corner, some are going to be surprised by the amount of tax they have to pay when they buy a car in the future.
Based on Confused.com’s calculations, the average UK driver currently spends £102 on car tax each year – that’s £38 less than the standard rate owners of vehicles emitting 1g/km CO2 or more will soon have to fork out, which is the annual figure paid each year from the second year of ownership onwards.
Add to that the steeper first-year rates many will have to factor in – even buyers of low-emissions petrol, diesel and hybrid models – and a five-year premium rate of £310 on top of the standard rate for cars worth more than £40,000 and the annual cost escalates to uncharted – expensive – territory.
VED BANDS & RATES FOR CARS FIRST REGISTERED ON OR AFTER APRIL 1 2017
Emissions (g/CO2/km) First-year rate
(Known as showroom tax) Standard rate 0 £0 £0* 1-50 £10 £140* 51-75 £25 £140* 76-90 £100 £140* 91-100 £120 £140* 101-110 £140 £140* 111-130 £160 £140* 131-150 £200 £140* 151-170 £500 £140* 171-190 £800 £140* 191-225 £1,200 £140* 226-255 £1,700 £140* over 255 £2,000 £140* * cars over £40,000 (listed as Premium) pay an annual £310 supplement for the first 5 years at the standard rate (excluding the first year rate)
Vehicles built and purchased before 1 April 2017 will not be affected by these rates.
As a result of car tax becoming costlier, the insurer said it expects to see a shift in mindset of people buying from new-car showrooms.
In fact, 40 per cent of the people it asked said the VED rules would put them off buying a 17-plate model.
Asked if they would feel more inclined to search the second-hand market for their next motor, 57 per cent said they would be – something that could spark used prices to rise.
Manheim auctions said it had seen an increase in used values in the months leading to the VED changeover, with the average auction price in February being 4.8 per cent higher than it was a year previous.
Amanda Stretton, motoring editor at Confused.com, said the new tax laws were ‘very complex’ as she showed sympathy with the nine in ten divers who didn’t understand what was just around the corner.
‘If you are looking to buy a new car, it’s definitely worth considering a purchase before April 1st, as your decision will affect the amount of tax you pay for years to come,’ she said.
Some 53 per cent of consumers said the cost of tax was a ‘major’ consideration for them when buying a new car
That said, it will be very difficult to secure a new car and register it in time for the deadline if you’re ordering today. That said, if you buy a vehicle from existing stock at dealers, you could still dip across the line before the VED changes apply.
‘If you are still planning to buy after April 1st, we’d recommend researching the car tax rates you can expect to pay for your new vehicle,’ Stretton added.
According to the research, Confused.com identified that the cost of tax and car emissions are two ‘major’ considerations when consumers choose a new car – over half (53 per cent) take into account the cost of tax when purchasing a new vehicle, while two fifths (43 per cent) consider the car’s CO2 output.
And how do they feel about the new rules? ‘Disillusioned’, the insurer said.
Some 55 per cent believe they’ve been introduced just to make the government money, and three in ten (30 per cent) believe it’s a move to encourage people to buy electric cars.
More than half (57 per cent) said the tax band changes are nothing other than another measure to unnecessarily increase costs for drivers.