So why the panic? Well, from this Saturday, April 1st, changes to the Vehicle Excise Duty (VED) are being introduced in the UK that could see new car taxation rates climb by almost 2,500 per cent in some cases. And no, sadly this isn’t some sick April Fools day joke!
Some new car models will command almost 25 times more VED taxation than previously, with six out of the UK’s ten best selling cars set to incur substantial tax increases. Even greener hybrid models will be hit, although some may still qualify for government grants of up to £2,500.
Recent analysis by the leading new vehicle consumer title What Car? reveals that the cost of taxing a car purchased after April 1st 2017 could increase by up to 25 times more, with even some of the most environmentally-friendly plug-in hybrids commanding sharp tax increases, particularly if they wear a desirable premium badge.
Prestige new car brands with larger capacity engines are set to be hit the hardest by the revised VED rates, with conventional hybrids such as the Lexus GS300h and RX450h being penalised in particular. Low-emission hybrid models such as these have traditionally been an attractive option for new car buyers seeking a luxury car with small-car emissions. Under the outgoing legislation, the hybrid Lexus examples cost their owners as little as £40 to tax over three years. Under the new VED rules, however, that cost will increase to £1,030.
Under the new VED legislation, only zero-emissions cars costing less than £40,000 will be free to tax. If they are very fast though, buyers still have a couple of days to make significant savings by purchasing before the deadline.
Sticking with the Lexus GS300h hybrid example, the near-£1,000 hike (+2,475 per cent) in the three-year VED tax bill is made up of a £150 first-year rate based on the model’s CO2 emissions, followed by two subsequent payments of the new hybrid flat rate of £130 per year, which applies to all vehicles with emissions above 0g/km CO2.