Car Tax additional rate

Soldato
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Hey

I'm a bit confused by this:

Vehicles with a list price of more than £40,000
You have to pay an extra £325 a year if you have a car or motorhome with a ‘list price’ (the published price before any discounts) of more than £40,000. You do not have to pay this if you have a zero emission vehicle.

You only have to pay this rate for 5 years (from the second time the vehicle is taxed).



So I'm looking at changing my car next year but the car I have in mind I believe would fall into this category (when it was new). My question, if the car was say 3 years old... do I pay the inflated road tax for 2 years? Or do I pay for 5 years, regardless of the age of the car from when it was registered? I'm hoping it is not the latter. :)

Cheers.
 
Soldato
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It says in the bit you cut and pasted “You only have to pay this rate for 5 years (from the second time the vehicle is taxed).”
 
Caporegime
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if you buy a 40K + car, you need to pay £325 ONTOP of the normal tax rate in the first year, 2nd year it will be slightly less, 3rd year a bit less, 4th year standard rate of what ever it is on your co2

(something like that)
 
Soldato
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if you buy a 40K + car, you need to pay £325 ONTOP of the normal tax rate in the first year, 2nd year it will be slightly less, 3rd year a bit less, 4th year standard rate of what ever it is on your co2

(something like that)

No it won't be. It will be a £325 surcharge for 5 years. It doesn't decrease.

Vehicle tax also isn't based on co2 emissions after the first year if you are buying a car that can be affected by this rule (2017 onwards).

My question, if the car was say 3 years old... do I pay the inflated road tax for 2 years? Or do I pay for 5 years, regardless of the age of the car from when it was registered? I'm hoping it is not the latter. :)

Cheers.

It is 5 years from new using the list price when new.

So you will pay £325 extra for 2 years (or 3 years depending on your exact timing I think) if buying after 3 years.
 
Last edited:
Soldato
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No it won't be. It will be a £325 surcharge for 5 years. It doesn't decrease. Shouldn't be giving financial advice if you don't know the answer.



It is 5 years from new using the list price when new.

So you will pay £325 extra for 2 years if buying after 3 years.

I thought the 5 years starts from when the vehicle is a year old (in other words the first time you re-tax it) - the initial year from new is covered by the co2 based lump that varies from nothing to over £2k.
 
Soldato
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I thought the 5 years starts from when the vehicle is a year old (in other words the first time you re-tax it) - the initial year from new is covered by the co2 based lump that varies from nothing to over £2k.

Yep so goes into sixth year, so you make 5 payments. I think it depends on the exact timing. What happens when you buy a car that is 3 years and a few months old. Is your 3rd year still affected?

I don't know the answer to that.
 
Soldato
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Thanks for the replies and help - I understand it now. :)

So yep, on the second year (not the initial year of tax) it has 5 taxations at the additional rate (£325 + £150). So if the car was 3 years old I'd be looking at x4 payments of £475 a year. For years 3 (my first payment when I buy the car), 4, 5 and into year 6.

Thanks v.much!
 
Soldato
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Yeah. I was VERY confused when they launched the Kia Stinger and the top GT model was something like £40,047 and I just thought WTF? Why not make it £39999?

But what do I know?
 
Man of Honour
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I also assumed the car market would change around it but it just didn't seem to, and there are now loads of cars where people still seem to add heated seats for 50 quid taking the price to £40,020 :confused:
 
Man of Honour
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Probably because if you're paying 40k for a car an extra 325 a year doesn't even register as something worth thinking about.

Except it does because 99% of people buying a car at this price point are not paying 40k for a car, which is why they are usually such poor specification. They are paying £x a month.
 
Soldato
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The real winners are the very expensive high CO2 gas guzzlers, Bentleys etc, who now benefit from a flat rate rather than a tiered emissions system.
Wish I had kept my 2014 Golf GTD...£20 a year VED.
 
Man of Honour
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The real winners are the very expensive high CO2 gas guzzlers, Bentleys etc, who now benefit from a flat rate rather than a tiered emissions system.
Wish I had kept my 2014 Golf GTD...£20 a year VED.

The whole system makes absolutely no sense.

Why should someone who pays £10k for a second hand 320i pay more road tax than someone who spent £38k on a brand new one just because one has professional nav and a sunroof and the other doesn't?
 
Soldato
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The real winners are the very expensive high CO2 gas guzzlers, Bentleys etc, who now benefit from a flat rate rather than a tiered emissions system.
Wish I had kept my 2014 Golf GTD...£20 a year VED.

Not really, the first year VED is now much higher. The tax is paid upfront now.

£2175 if >255g (first year) and then the £325 premium for 5 years on top of the standard £150.

For cars before 2017 it is £580 per year for >255g.

I know which I'd rather have.
 
Soldato
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Not really, the first year VED is now much higher. The tax is paid upfront now.

£2175 if >255g (first year) and then the £325 premium for 5 years on top of the standard £150.

For cars before 2017 it is £580 per year for >255g.

I know which I'd rather have.

First year VED is included within advertised OTR prices though isn't it?

For most people that makes a big difference - it's the mental association of having to pay something extra that they dislike.

Given most new cars are financed anyway, they never really see this figure as a lump sum day 1 payment either.
 
Soldato
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First year VED is included within advertised OTR prices though isn't it?

For most people that makes a big difference - it's the mental association of having to pay something extra that they dislike.

Given most new cars are financed anyway, they never really see this figure as a lump sum day 1 payment either.

The point is that @turbot1984 is wrong. Just because people are ignorant of this first year rate doesn't make it better for gas guzzlers than before.

What if that first year rate was £5000. Is the new system still better just because it's a lump sum payment upfront.

Even if you are financing it, you are paying higher monthlies for that VED. How can you ignore it.
 
Soldato
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The point is that @turbot1984 is wrong. Just because people are ignorant of this first year rate doesn't make it better for gas guzzlers than before.

What if that first year rate was £5000. Is the new system still better just because it's a lump sum payment upfront.

Even if you are financing it, you are paying higher monthlies for that VED. How can you ignore it.

The ignorance is exactly what makes it 'better' for them and the fact it gets rolled into the monthlies (or the deposit or whatever else) is exactly why. As I said above, it's the mental feeling of having to pay 'extra' that people don't like - this is the behaviour that saw people spend thousands on newer cars a few years ago because "its only £30 tax though".

As long as your '£50k car' is still a £50k car or less by the time the finance paperwork is getting signed, people will happily ignore whether £200 or £2000 of that figure was year 1 VED. The price is the price and as long as it doesn't go up, purchasers are happy.

I think it would have a far bigger effect if manufacturers didn't have to advertise it as part of the OTR prices, as then people would mentally view it as 'extra' to the price they have in their head and pay attention to the fact it possibly even varies from one model to another within a range.
 
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