Breaking It Down: The New Road Tax System Guide

00:32

As part of the Chancellor's recently announced budget, some pretty significant changes have been made when it comes down to how your car is taxed on the UK roads. This new system has several little 'catches' to it, and it's questionable in my mind. As you'll discover, some people will benefit massively, and some will be utterly ripped off.

Let's start with the headline figure: flat rates. Yes, if your car emits some form of CO2, you will always be paying £140 per year - regardless whether you're driving an eco diesel supermini, or a monstrous petrol Range Rover. It's quite a change, when you consider that the rates depended on how much CO2 your car emitted. Now, that doesn't seem to matter.

Except it still does matter. You see, when you buy a car new, you pay a new duty. How much you pay here depends on how much your car emits. But this is only an initial cost, not annually like the current system. Also unlike the current system (which allows you to be exempt from taxation if you emit under 100g/km), you will always pay the initial duty cost - even if you're emitting just a gram. The only way you can escape this time is to go full electric/hydrogen.

From Mail Online

 Are you still following? We have an initial duty cost, and then a flat rate afterwards. But we're not done yet. When the new system becomes implemented, anyone who purchases a new car costing £40,000 or more will have to pay an additional annual surcharge of £310 from the second to sixth year after it is bought. So if you buy your posh BMW, you have the duty cost, the flat rate, and then the what I call 'posh tax'. It's clearly all part of the Conservative's plan on being the 'working people's party'.

Let's do some number-crunching now, and discover who benefits and who gets ripped. I'll take three different cars: a new efficient city car, an ageing hatchback (representing a working class family), and a new executive saloon.  


The Conservatives love you! As long as you're not
on benefits, that is...
New City Car - Ford Fiesta 1.0L EcoBoost 125bhp (99g/km)
Current system: £0 per year
New system: £120 year 1; £140 year 2 onwards

Ageing Hatchback - 2005 Vauxhall Astra 1.8 122bhp (182g/km)
Current system: £225 per year
New system: £140 per year (no duty due to the car being secondhand)

New Executive Saloon - 2015 BMW 530d 258bhp (144g/km)
Current system: £145 per year
New system - £200 year 1; £440 years 2 to 6; £140 year 7 onwards

As you can see, this new system does come at an advantage to those working class families who may have an older, dirtier car. But it does come with its own issues. For example, the current tax system benefits and praises people who buy new, clean cars with zero tax. With this new system, what's the point of buying a new eco-car (which are usually pretty expensive), when you can buy an older normal car and actually pay more or less the same amount of tax? Similarly, if you were holding off that big-engined ageing SUV because that tax cost was eye-watering, now you'll be able to afford it and pay the same tax as someone in a secondhand Toyota Prius. When you have that kind of perspective, you realise the new car sales may go down by quite some margin.
This will be the same to tax as a Prius. Yes, really.

Then again, I do believe everyone should pay road tax and contribute to the maintenance of our roads. With more and more people buying tax-exempt cars, it was only a matter of time before the rules changed. But this new system just seems like a middle finger to the environment.

0 comments