The £40k car tax (quick question)

Schizophonic · 20 Jan 2022 at 17:40

Never heard of this till someone mentioned it to me and I'm questioning how does it apply for me when and if I buy a new car. I have a question or want to know cavate if anyone knows?

If I buy a Ex-demo or 6 month old used car which comes at £39,995 for example - does that mean i have to pay the higher tax band of when the car was listed as 'NEW' e.g. £44k but has reduced to £39,995?

Housey · 20 Jan 2022 at 17:44

It is based on list price I believe.

Greebo · 20 Jan 2022 at 17:45

ALways list price sadly. Same with BIK. Always erked me esp when I got a list price VW Touareg reduced from £54k to £38k but still had to pay tax on it as if it has cost the company £54k.

dlockers · 20 Jan 2022 at 17:45

Yes if the car was originally over 40k.

I paid £32k for my E43 and pay the premium as it was originally over £40k.

Sirrel Squirrel · 20 Jan 2022 at 18:51

Yep rrp unfortunately

theone8181 · 20 Jan 2022 at 19:25

Is it different for electric cars then, as the bik is lower I believe.

Kenai · 20 Jan 2022 at 19:26

theone8181 said:
Is it different for electric cars then, as the bik is lower I believe.

Zero emission vehicles are exempt afaik

Jonnycoupe · 20 Jan 2022 at 23:27

Such a stupid threshold, no tier just £1 over and bang your are paying £310 premium. Really didn’t help the JLR range when it came in. Was a pain when speccing my parents car both times to avoid £40k else then few things that take it over turn out VERY expensive.

theone8181 said:
Is it different for electric cars then, as the bik is lower I believe.

VED for all road cars, not just company cars and benefit in kind. But yes electric cars also don’t have the premium added even if they exceed £40k.

turbot1984 · 20 Jan 2022 at 23:38

Choker isn't it? My early 2017 previous car just missed it so £150 tax a year. New 2020 one cost less but £470 tax i think, and i paid less than £40k for it due to big discount.

lordrobs · 21 Jan 2022 at 10:23

Greebo said:
ALways list price sadly. Same with BIK. Always erked me esp when I got a list price VW Touareg reduced from £54k to £38k but still had to pay tax on it as if it has cost the company £54k.

Yeah, stings that my pre-reg Leon that cost the company £15k is taxed to me with a P11D value of over £25k. Still, better than being taxed for a 9 year old £20k+ Passat with 170k on the clock :mad:

I think the BIK alone ended up at about four times the cars actual value :rolleyes:

Housey · 21 Jan 2022 at 10:46

Cost me £490 to tax my 530D yesterday for 12 months.

dod · 21 Jan 2022 at 12:54

Is it just the list price (plus extras) or does it include things like delivery charges?

Greebo · 21 Jan 2022 at 13:14

dod said:
Is it just the list price (plus extras) or does it include things like delivery charges?

The list price as far as whether it is over £40,000 includes delivery charges and number plates and pre delivery inspection.

see page 5 of the DVLA Q&A here

https://assets.publishing.service.g...00/ved-reform-webinar-q_a-10-january-2017.pdf

dod · 21 Jan 2022 at 13:41

thanks

silvagti · 21 Jan 2022 at 13:47

Yeah, it sucks. You buy an expensive premium car and you have to pay more tax. Not because of its size, carbon footprint, lack of efficiency, etc.

Just purely because it’s expensive and the government feels entitled to gouge you for even more money!

SDK^ · 21 Jan 2022 at 13:59

...and it's not linked to inflation, so every year more cars get sucked into it.

Greebo · 21 Jan 2022 at 14:02

SDK^ said:
...and it's not linked to inflation, so every year more cars get sucked into it.

Inflation would help but with cars they quite often go way past inflation. I noticed both BMW and Merc uplifted their prices by at least 10% last October (well the SUV type of cars I was looking at)

silvagti · 21 Jan 2022 at 14:39

Jonnycoupe said:
Such a stupid threshold, no tier just £1 over and bang your are paying £310 premium. Really didn’t help the JLR range when it came in. Was a pain when speccing my parents car both times to avoid £40k else then few things that take it over turn out VERY expensive.

Yeah, it's pretty unfair especially if you're buying a car close to the £40k limit as the moment you tick over it you'll be handing over an extra £1550 in tax over 5 years. Basically adds around 4% to the sticker price.

They really should have it tiered so those buying super expensive cars pay more on a sliding scale if "taxing the rich" is the intention. Doesn't seem reasonable that someone buying a Golf GTi should pay the same "luxury car tax" as someone buying a motor costing multiple times the cost. Personally I'd rather they just ditched it or added it to "luxiry car VAT" rate /etc.

At least make the tax proportionate somehow :mad:

SDK^ said:
...and it's not linked to inflation, so every year more cars get sucked into it.

Exactly , give it another 5 years or so and your average compact famaily car will start from ~£40k the way things are heading according to the RPI! I'll wager they ditch the electric car exemption in a few years time as well!

Martynt74 · 2 Feb 2022 at 16:25

Jonnycoupe said:
Such a stupid threshold, no tier just £1 over and bang your are paying £310 premium. Really didn’t help the JLR range when it came in. Was a pain when speccing my parents car both times to avoid £40k else then few things that take it over turn out VERY expensive.

VED for all road cars, not just company cars and benefit in kind. But yes electric cars also don’t have the premium added even if they exceed £40k.

Yeah, when i was looking for our Lexus NX, the base spec car was £39,995, so even speccing an optional colour took the price over £40k, and effectively made choosing a non standard colour a very expensive extra (~£800 cost price plus 5x £310). It kind of baffled me that people did it, although the base black colour is pretty rubbish looking!

dlockers · 2 Feb 2022 at 19:57

Martynt74 said:
Yeah, when i was looking for our Lexus NX, the base spec car was £39,995, so even speccing an optional colour took the price over £40k, and effectively made choosing a non standard colour a very expensive extra (~£800 cost price plus 5x £310). It kind of baffled me that people did it, although the base black colour is pretty rubbish looking!

The army green colour they come in is totally worth it. So nice!