High emission ‘monster’ cars that cost 25% of their value just to tax

| October 12, 2012 | 0 Comments

Lee Boyce

06:27 EST, 12 October 2012


10:35 EST, 12 October 2012

Thousands of motorists are paying nearly a quarter of the value of their car simply to tax it each year, research has revealed.

According to car valuation experts Glass’s, those with cars less than six years-old are being hit the hardest, with some paying up to 23 per cent of their vehicle’s value just on annual Vehicle Exercise Duty (VED).

This is because motors registered after March 2006 which emit over 225g/km of CO2 fall into the highest tax bands for cars (L or M) with owners having to shell out between £460-475 in VED.

Tax turmoil: VED on the Mitsubishi Shogun Pinin is high - falling in the Band L category, it is £460 per year, or 17% of the retail price of a six year-old model

Tax turmoil: VED on the Mitsubishi Shogun Pinin is high – falling in the Band L category, it is £460 per year, or 17% of the retail price of a six year-old model

The tax system penalises newer cars with higher emissions more heavily than those registered before March 2006, in a move to encourage manufacturers to produce more efficient models.

However, it is the owners of cars produced after this date who are being hit hard in the pocket – as the value of their cars fall, VED either freezes or nudges up each year.

The high tax bill combined with fuel guzzling engines means that vehicles which fall into the higher tax bands are becoming an increasingly less attractive proposition for buyers, which in turn is hitting the value of these models.

The impact of this is that owners of these models aren’t just suffering when it comes to their annual tax bill, but also when they come to sell or trade-in their car, as they are likely to get less than they expect.

For example, a 2006 Chevrolet Tacuma 2.0 is currently valued at just £2,010 according to Glass’s – a price which will have been heavily affected by its annual £460 tax bill. This tax bill equates to 23 per cent of the total value of the car.

We reveal the top ten cars that are six years old, with the highest level of VED as a percentage of their price below:


Glass’s is warning consumers tempted by the low cost of some models to beware – while the purchase price may seem attractive, the running costs, largely thanks to VED, are less affordable and should be taken into consideration when the purchase decision is being made.

Adrian Rushmore, Glass’s managing editor, says: ‘The new VED system is disproportionately tough on newer cars in order to encourage manufacturers to produce more fuel-efficient models. But motorists with cars just under six years old and with high fuel consumption are the ones who are being forced to bear the brunt of this as the value of their cars falls sharply.

‘Many owners will have purchased their cars well before the new system came into force, so you could refer to this as a “stealth tax.”

‘Values for models which fall into the L or M tax band are set to continue to fall faster than the market norm – so it may be a good time to sell. However if you are in the market for a five or six year old, powerful car, you could bag yourself a bargain – but only if you can stomach the yearly tax bill.’

Last week, This is Money revealed how government adviser – Tim Leunig for think-tank CentreForum – believes that motorists who buy petrol-guzzling sportscars, 4x4s and other large-engined vehicles should have a big one-off emissions charge added, allowing annual road tax for all to be scrapped.

The scheme would work by imposing a one-off purchase tax on new cars that produce large volumes of pollution – in turn, some of the money raised would be used to subsidise the purchase price of more fuel efficient motors.

The idea was met with a strong reaction on our comments board. Pete the unbeliever, from Maidenhead, said: ‘What bird brain thought up this idea? It would kill the luxury car market and put more people on the dole. What’s wrong with putting a small extra tax on fuel and scrapping the road tax altogether? Then those who use the roads most pay.’

Fiat Panda: With the 0.9T Twin Air Pop model falling in Band A, drivers don't pay VED

Fiat Panda: With the 0.9T Twin Air Pop model falling in Band A, drivers don’t pay VED

It is possible to avoid VED
altogether – under current road tax legislation, cars that fall into the
Band A category are eligible for free annual road tax as they have
emission levels of 100g/km or less.

of the most popular models include the Ford Fiesta 1.6 TDCi ECOnetic
Diesel, Toyota Yaris 1.5 VVT-i Petrol Hybrid, Vauxhall Corsa 1.3 CDTi
95PS ecoFLEX S, Audi A1 1.6 TDI SE Sport Contrast Edition S Line Diesel
and Fiat Panda 0.9T Twin Air Pop, Easy, Lounge.

Filed Under: finance news

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