Tax Changes Might Mean Greener Cars Cost More

In a recent announcement the government will be removing the different road tax brackets across the range of engines sizes and having a standard cost after the first year. Will this mean that buyers won’t be tempted to opt for a more economical car because the road tax savings are not there any more?

VED

Vehicle Excise Duty is the real name for road tax, long gone are the days where this tax was actually used directly for work on the road system. An argument that many people push against cyclists as they don’t pay “road tax” however, the tax is actually for the car not the use of the road. Currently there is a sliding scale of payment depending on the type of car; large engines generally cost more than small engines with some variation depending on green credentials. This system makes a clear statement to any potential buyer that greener cars are cheaper to run all round.

The New System

The new system set to launch in 2017 will have a flat fee of £140 charged per year on all vehicles after the first year. This will also then see a supplementary levy raised for 5 years of £310 on cars costing more then £40,000. In the first year only zero emission cars will be exempt from tax but once that year is up the car is treated exactly the same as any other, regardless of emissions and engines size. For many people who have opted for greener EcoBoost engines or the Nissan DIG-T they will no longer see any benefit from this in terms of VED.

What This Means

In the current market the number of cars that would qualify as tax free would drop from 445 to just 13. Over the next year or so there may be some newer models that will fall into this bracket but generally speaking the game will change significantly.

Of course, greener cars will still save you lots of money on fuel, not to mention to environmental benefits but there is no doubt lower annual road tax figures are also very attractive to people when considering a car. This change lumps all cars into the same bracket and that is really not a fair representation of the damage and strain a car places on the environment. A 1.0 litre EcoBoost Ford Focus is a very different proposition to a large 5.0 litre BMW and to have them both essentially paying the same flat rate seems a little odd. Of course the BMW would cost more so would incur the further cost but the message this move sends out is not one of greener car buying.