VED causing cars to be scrapped

I'm not really sure it will cause that many cars to be scrapped. It's not as if you can go and buy another one with 12 months tax for less than the cost of the tax.
 
I don't understand why someone would scrap their car just because VED makes up half the value of the car. If I have a £1000 car and it is still running well, paying £500 a year on tax, it costs £500 a year.

If i decide I don't like that and buy a new car, ok I might now only pay £100 a year in tax, but I've had to spend how many thousands to get the new car. Even buying a car for £5000 is 10 years worth of VED on the old car.

It's only worth scrapping the car if the total cost of running and repairing said car is more expensive than getting a new car.
 
It gets more complicated as newer cars are typically cheaper to run for similar performance, but say you had a car that cost a certain amount to run each year and ignoring all repair costs.

Now say you could get a new car that costs the same to run each year, then there is no difference in year to year cost of the 2 cars, only with one you have spent a few thousand to have a newer car.

Of course there are many other factors to take into account when scrapping a car for a newer one, but at the most basic level a car should not be scrapped purely because it costs a large proportion of its value to run.
 
Such a difficult one and a shame if they do get scrapped.

I must admit the Alfa costs me about £250 to tax which is about as much as I am prepared to pay at the moment. A L or M banded car is only going to be a couple of hundred quid more and to be honest could land you with a real bargain as they become less desirable.

I know it simply boils down to the running costs, however when you shell out £450-£500 before you start to maintain, put petrol in or drive a car is very disheartening. It is not like you will ever get anything back or benefit from it.

I wish they would abolish or reduce the tax bands as they get older to avoid this. That will never happen I guess though.
 
I didn't mean that people will scrap their cars because they cost too much to tax. I meant that when those cars appear on the used market, no one will buy them because the tax makes up such a high proportion of the value of the car. Thus, they will get scrapped instead.
 
Rilot said:
I didn't mean that people will scrap their cars because they cost too much to tax. I meant that when those cars appear on the used market, no one will buy them because the tax makes up such a high proportion of the value of the car. Thus, they will get scrapped instead.
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Only if there is an oversupply such that the price is bid down to zero.

Also this can happen in the absence of positive VED values. A perfectly good car could have residual value below that of it's scrap value. In such a case, should the government have negative VED? (perhaps they should if there is an environmental benefit, the government spends a lot of money on recycling already).

The problem of reducing VED (at a certain age) is that is relatively a subsidy. Also the impact is felt up the age curve as the depreciation of a car changes and so more of these vehicles might be bought new.

edit:

I wonder if someone has done a proper analysis. Simple google search shows up nothing.
 
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This has played out in Ireland for years, not necessarily scrapping but going owner to owner or remaining untaxed. Other European countries have it far worse but I can only offer Ireland as an example:

cc vs Cost (£)
2001-2100 770.1
2101-2200 808.35
2201-2300 844.9
2301-2400 878.9
2401-2500 918
2501-2600 1099.9
2601-2700 1143.25
2701-2800 1182.35
2801-2900 1226.55
2901-3000 1269.9
3001-15000 1537.65

Yes, that's £1270/year to tax any 3.0l car up to 2007 which I know is a bill that a lot of motors members would face if living in Ireland. Up until this year, all cars registered in Ireland also had to pay a non-refundable registration tax of about 30% of the vehicles value in Ireland (so about 50% UK value). It still exists, but it's now refundable and is now based on Co2 (this changed in 2008).

What this all amounted to was the fact that anyone who bought a car with an engine larger than 2.0l could enjoy hefty depreciation and write off the value of the registration tax almost instantly. The net result is that Ireland's roads are full of 1.0 Micras, 1.4 Golfs and 1.6 Primeras & Passats, as well as a heap of Skoda Octavias. The only large engined cars you're likely to see are diesel. The new tax system is based on Co2 so if you have a 2008 car emitting 226mg CO2 or more, your annual tax bill is £2000/year meaning that manufacturers don't even try and sell any interesting engines in Ireland.

My fathers 2005 S-type is worth the same in Ireland as in the UK even thought he paid £15000 registration tax when it was 1 year old and the tax cost has gone up by about 20% over the last 5 years. He does about 3000 miles/year. The country is a disaster for anyone who likes nice cars :(
 
I wish they would abolish or reduce the tax bands as they get older to avoid this. That will never happen I guess though.
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They did!

When the zero tax band (Historic/classic) was first introduced it was a simple 25 year old criteria.

it was reverted to a fixed date in Browns first budget! It was a nasty mean spirited thing to do (What do you expect from laborites) and he knew it! (The change wasn't mentioned in the budget speech, it only came out later in the small print!)
 
The other thing to consider is that I would think many folks MOT and Tax would be due at the same time, so the two costs together (assuming repairs needed... ) may be the straw that breaks the camel's back.

Typically this may be someone who bought the car because it was "stylish" without possibly having the funds to swallow big bills when they arise.

Then you get MOT, perhaps 2xTyres etc etc.
 
Surely market forces would just dictate that high band will just sell for less, being less desireable? I can't see many scrapping their car and buying a new one over VED, particularly performance motors. Then again, there are millions of people who think selling up a perfectly serviceable petrol to by a super MPGzzzz 1.5l tractor is a good, financially sound idea :p
 
d_brennen said:
I can't see many scrapping their car and buying a new one over VED,
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Don't be so sure. Remember a few years back when the government were doing the scrappage scheme?
Thousands of people had perfectly serviceable cars scrapped in order to buy a Korean crap-box.
 
commited said:
This has played out in Ireland for years..... (
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It's a joke. I'm paying over 600 quid to tax an MX5 here in Dublin- over three times what I'm paying to tax the Evo in the UK.

The country is full of **** cars, and a V8 over here is but a mythical beast spotted as commonly as a unicorn or the common-spotted Hydra.
 
Rilot said:
Don't be so sure. Remember a few years back when the government were doing the scrappage scheme?
Thousands of people had perfectly serviceable cars scrapped in order to buy a Korean crap-box.
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Quote my whole post, I did concede there were millions of idiots out there :p
 
d_brennen said:
Quote my whole post, I did concede there were millions of idiots out there :p
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So you did. Sorry.
Just be happy that there are people like me in the world who will happily pay through the nose to hear the glorious sound of a V8.

Hmm, maybe it's us that are the idiots.
 
Rilot said:
Don't be so sure. Remember a few years back when the government were doing the scrappage scheme?
Thousands of people had perfectly serviceable cars scrapped in order to buy a Korean crap-box.
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That's different though. The government (and manufacturer) were effectively buying your car for a price which you wouldn't get in a PX.
 
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