Motoring: Using road tax rules to your advantage
- Credit: Submitted
Paul Jolly, classic car specialist and valuer:
Motoring costs are never likely to reduce particularly as this administration seeks to recover Covid-19 economic disruption with various tax hikes.
The shift from internal combustion engines (ICE) to electric vehicles (EVs) also presents a problem.
EVs pay no road tax as an incentive to make the change but the success of this transition thereby gradually reduces the Government's road tax take.
Should they introduce road pricing which charges on a per mile basis?
Well, this would jeopardise the push for electric vehicles since one of the major selling points is running costs.
In any event the Government has ruled out road pricing for now.
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George Osborne was one of our longest-serving Chancellors from 2010 to 2016 and during his time he oversaw the programme of incentivising reduced C02 emissions via the road tax scheme.
ICEs that achieved under 100 g/km were exempt and rates were only £20 or £30 annually if slightly above this magical figure.
However, he underestimated the manufacturer’s ability to cut emissions as well as they did and soon you could buy a 1.6 diesel Mondeo with zero road tax and 70mpg.
Describing this as ‘unsustainable’ from a revenue perspective, he introduced a minimum tariff of £140 for all non-EVs regardless of emissions starting April 2017.
Therefore, of two identical 2017 cars advertised for sale but registered one month apart, one will pay an extra £140 every year.
If you are in the market for a used car, as many are given the shortage of new models, then keep an eye out for this quirk in the system and save yourself some cash each and every year you own the car henceforth.
Remember, the new rules also add some £350 pa road tax surcharge to cars that had a list price over £40,000 for the first five years.
These road tax anomalies make pre-2017 cars very attractive for the time being while you ponder your next move if you have to buy something now.
The depreciation also adds to the appeal.