Should the 'luxury car tax' threshold be raised?

[[TW]Fox]

Yes, I suppose it's like stamp duty. Introduced when the threshold affected relatively few house sales, but now is pretty much on every sale to some extent.

I disagree - it was always a low value which included various cars that few people would consider 'luxury'.

At the time it was even worse in that almost nobody ever bought a car at list price - huge discounts were normal, so you could buy a car with a couple of options brand new for £32k and still have to pay the higher rate because the list price was over £40k.

At least now if your car has a list price of £40k you've probably paid at least that for it new

 

[HangTime]

I never understood why it was introduced in the first place. It penalises people for buying and expensive car, not a polluting one. I would have thought that value of vehicle has nothing to do with what the gov were wanting to achieve, which I assume, is to reduce pollution. The sooner we get rid of the 200+ CO2 vehicles the better IMHO but penalising people for buying a car that costs more than 40k seems ridiculous.

And yes,the extra years of £475 a year road tax does sting because it seems so unfair.

The thing is they needed to maintain the tax take somehow against a backdrop of more efficient engines and hence less cars in the £LOL VED brackets based on emissions.
The actual premise I don't have a big issue with it's more the implementation whereby there is no stepped increment, it's just BAM £40k as a magic threshold, a bit like the old stamp duty system where you could buy a house for £250k and pay no stamp duty, but if you paid £250,001 you had to pay £7.5k or whatever it was in stamp duty. Or in this case you have a situation where adding a floor mat could cost you £1500 or whatever (obviously you wouldn't do that, but you get my drift). It may also impact resale values a little because when shopping for used cars I'd be trying to avoid cars just over the £40k list threshold.

That kind of brings me to another point actually, that it makes searching for used cards more painful because you can't easily search based on original list price. So like you can say OK, make X, model Y, trim level Z... maybe some of those are <£40k list and some are >£40k list dependent on age, what options were added, what paint etc etc. So a car might be priced at £500 less than a very similar one but actually cost you more than £500 extra in tax.

Who buys a £40k+ car and can't afford to pay the additional costs for it? There's plenty of used cars below that which have all of the "needs".

Edit: just saw it includes used cars with a "new value" of £40k... I don't agree with that.

New? Yes.
Used < 5 years ago? No...

This is kind of my point from the OP, the answer to "Who buys a £40k+ car?" is a bit different than it was 5 years ago because more and more cars are hitting £40k list price. Every car we've bought has cost under £15k (with a list of price of under £25k) but looking at options for the next car a lot of them are touching that £40k barrier and I'm not looking to push the boat out on some sort of ultra luxury (what I really want would probably cost £60k+). I'm the sort of person that would really begrudge paying the surcharge regardless of whether I can afford it or not. I don't want a 320d but like people say maybe that's a good example, add any options to the base spec and you're looking at 40 grand.

 

[Barks]

As much as I love cars, my personal view is we need to scrap VED and move to road user pricing where it's feasible to implement, particularly in cities and for ICE cars. London is a disgusting place to live partly because too many people have cars when there's no need for them - and yes that includes me. I remember reading somewhere the average journey distance is about 2km which is just pathetic. I reckon a 'pay as you go' disincentive approach is not only fair and would plug finances for the Government but also reduce traffic volumes and all the externalities that come with it. Outside of cities the argument is different as public transport often isn't up to the job and cars become more of a necessity than a nice to have.

The other issue I have with VED is it's arguably unfair and disconnects road use to the negative externalities imposed. Someone paying the highest rate could drive their car 1km a year and pay more than someone in a lower bracket driving 100,000km a year. The latter is causing far more externalities e.g. pollution, congestion, wear and tear on roads etc. It needs a rethink.

 

[MatteRB26]

This is kind of my point from the OP, the answer to "Who buys a £40k+ car?" is a bit different than it was 5 years ago because more and more cars are hitting £40k list price. Every car we've bought has cost under £15k (with a list of price of under £25k) but looking at options for the next car a lot of them are touching that £40k barrier and I'm not looking to push the boat out on some sort of ultra luxury (what I really want would probably cost £60k+). I'm the sort of person that would really begrudge paying the surcharge regardless of whether I can afford it or not. I don't want a 320d but like people say maybe that's a good example, add any options to the base spec and you're looking at 40 grand.

I guess it comes from how people see luxury differently. Our 2015 Fabia estate is plenty for us, cost us £7.5k in 2019 (and last I checked, the price hasn't even changed!!). We've been on holidays that packed the car, but we took a _lot_ of stuff - most of which could be alleviated by a roofbox.

It's £20 tax, insurance is dirt cheap, running costs are low and maintenance-wise it's been great so far (let's ignore the fact that the wipers need looking at as they turn on by themselves). I was looking at an Audi A4 Avant at the time too, which would've been "luxury" enough for me too. These days I'd consider changing to a Kodiaq which still isn't exactly luxurious, but to me it'd be wild

The fact it goes off of the "new" list price I don't agree with, because like you said, most cars approach that. What I do agree with is it's current worth though. If you want to buy an actual luxury vehicle that's entirely on you.

 

[[TW]Fox]

It's £20 tax

But it wouldn't be if it was just a few years newer - don't think the changes to the tax system only made tax more expensive for £40k+ cars!

It would have been what, about 7 times more expensive if it was a 2018 Fabia instead of a 2015.

These days I'd consider changing to a Kodiaq which still isn't exactly luxurious, but to me it'd be wild

The fact it goes off of the "new" list price I don't agree with, because like you said, most cars approach that. What I do agree with is it's current worth though. If you want to buy an actual luxury vehicle that's entirely on you.

I can only assume you've missed the point. You freely agree here that a Skoda Kodiaq is a car you'd consider and don't think is luxurious. I'd agree. It's a good family car.

Did you know that there are various models in the Kodiaq range which qualify for the 'luxury car' rate of tax?

Did you know you'd still have to pay more than £500 a year to tax a 2 litre diesel Skoda, even if you paid £10k for a high mileage example thats 5 years old in the future?

Imagine paying 5% of the value of the car in vehicle excise duty per year, simply because years ago when somebody you've never met bought it for well under £40k after discounts it had a 'list price' in the brochure of more than £40k.

 

[Housey]

Frankly I am not happy about poorer's having nice things.

How the hell can we feel smug at car meets or on car forums anymore?


Christmas is coming, bah humbug

 

[Surveyor]

That kind of brings me to another point actually, that it makes searching for used cards more painful because you can't easily search based on original list price. So like you can say OK, make X, model Y, trim level Z... maybe some of those are <£40k list and some are >£40k list dependent on age, what options were added, what paint etc etc. So a car might be priced at £500 less than a very similar one but actually cost you more than £500 extra in tax.

Car Tax Check | Check Car Details

Car Tax Check. Check vehicle tax by entering your vehicle registration number. We provide vehicle make, model and year, road tax status, and road tax costs.

www.checkcardetails.co.uk

No idea how precise it is but it does show the additional tax if I check a known more than £40k vehicle.

 

[MatteRB26]

But it wouldn't be if it was just a few years newer - don't think the changes to the tax system only made tax more expensive for £40k+ cars!

It would have been what, about 7 times more expensive if it was a 2018 Fabia instead of a 2015.



I can only assume you've missed the point. You freely agree here that a Skoda Kodiaq is a car you'd consider and don't think is luxurious. I'd agree. It's a good family car.

Did you know that there are various models in the Kodiaq range which qualify for the 'luxury car' rate of tax?

Did you know you'd still have to pay more than £500 a year to tax a 2 litre diesel Skoda, even if you paid £10k for a high mileage example thats 5 years old in the future?

Imagine paying 5% of the value of the car in vehicle excise duty per year, simply because years ago when somebody you've never met bought it for well under £40k after discounts it had a 'list price' in the brochure of more than £40k.

I know the Kodiaqs can go over that £40k mark, if I could afford a £40k car I wouldn't mind paying extra to own it? I do also know what tax is like on diesels - I'd also never own a diesel

I've also already said a couple of times that I don't agree with it being applied to used sales. So in my world - no I wouldn't be paying 5%/year on a car someone bought New years ago.

 

[[TW]Fox]

I could afford a £40k car I wouldn't mind paying extra to own it?

I bet you would if you found yourself in that situation!

You wouldn't mind paying £355 a year more in tax because your car has a couple of additional items of specification over the base model of the same car? Really?

 

[MatteRB26]

I bet you would if you found yourself in that situation!

You wouldn't mind paying £355 a year more in tax because your car has a couple of additional items of specification over the base model of the same car? Really?

If I had over £40k to drop on a brand new car, I'd be prepared to pay what comes with that, yes

 

[[TW]Fox]

If I had over £40k to drop on a brand new car, I'd be prepared to pay what comes with that, yes

That's not the same thing at all though is it. I'm not even sure what your point is now?

It's possible to be both prepared to pay something and also be unhappy about having to do so or disagree that it is fair or proportional.

 

[MatteRB26]

That's not the same thing at all though is it. I'm not even sure what your point is now?

It's possible to be both prepared to pay something and also be unhappy about having to do so or disagree that it is fair or proportional.

Why is it not the same thing? I think that yes, if you have the means to spend over £40k on a new car (we've already established that I disagree with used car sales). There's plenty of cheaper options that provide what people need (and used, assuming that it didn't apply to used as I've covered), anything more is a want In my eyes.

 

[[TW]Fox]

Why is it not the same thing?

Why is it?

Just because you're prepared to pay for something doesn't mean you are happy about it.

if you have the means to spend over £40k on a new car

You keep saying this but I don't understand the relevance. Should we make vehicle excise duty on £100,000 cars £10,000 a year? I'm sure those who buy £100k cars have the means to pay that, so why not?

Why is tax on a Mini only £140? If you have the means to buy a £30k new car like a Mini Cooper S Works you can afford more than that, right?

 

[HangTime]

Well I'm absolutely in this group. I can pay £40k today for a new car if I want to do, I have the cash readily available. But I don't want to pay this extra >£350 year in tax compared to a £39k car. If a £40k car was taxed at say 2.5% more than a £39k car then yeah, I wouldn't sweat it.
And yeah, there are cheaper options that cover the 'needs', that's the market I've always operated in, but there are way less options than there used to be. The situation is, I want a good family car that has a big boot, a not terrible engine, good comfort, good safety, and an upgrade on current car, I'm prepared to pay 50% more than the list price of any car we've ever owned, basically anything up to £40k list price, and I'm coming up short, it ends up being I could pay >£20k tradeup to get something that's barely an improvement on what we have already, to get a proper upgrade it's £30k which would kind of be OK if it wasn't for this extra chunk of tax whacked on top, it gets to the point where you think we may as well just stick with what we have.

It's a really common issue that people think if people can afford to buy something 'expensive' that they don't care about value or other drains on their cash. Maybe the reason they can buy a £40k car in the first place is because they are cautious or at least 'sensible' with their cash.

Car Tax Check | Check Car Details

Car Tax Check. Check vehicle tax by entering your vehicle registration number. We provide vehicle make, model and year, road tax status, and road tax costs.

www.checkcardetails.co.uk

No idea how precise it is but it does show the additional tax if I check a known more than £40k vehicle.

Yeah I considered this sort of site when writing my post but the issue is that doesn't actually help the original search much, you have to manually check each and every car you come across, you can't filter them out of your search to begin with.

 

[Firestar_3x]

Aren't most people buying cars on finance anyway and will never own the car? These people can't afford a 40k car in reality so having to pay more tax must hurt.

Anyway the idea of Luxury car tax is a joke, we pay it begrudgingly.

 

[paradigm]

I still find it odd that of the three cars currently on the drive, only one I paid over £40k for, yet it’s the other two I’m paying the additional tax on.

Are electric vehicles over £40k not a luxury?

This is the bit I don’t really understand. If it was a fuel guzzling tax, or an emissions tax then the value of the vehicle is irrelevant. If it’s truly a “screw those with disposable income” tax then why isn’t it banded and fuel-type agnostic?

 

[HangTime]

What's even more strange it is electric vehicles used not to be exempt. They actually explicitly changed the rules to exclude them.

A couple of years back it was a big issue with Tesla marketing the Model 3 at under £40k but the had a delivery charge (that counted for tax purposes) pushing it over the threshold!

 

[dlockers]

I still find it odd that of the three cars currently on the drive, only one I paid over £40k for, yet it’s the other two I’m paying the additional tax on.

Are electric vehicles over £40k not a luxury?

This is the bit I don’t really understand. If it was a fuel guzzling tax, or an emissions tax then the value of the vehicle is irrelevant. If it’s truly a “screw those with disposable income” tax then why isn’t it banded and fuel-type agnostic?

Come on now, use big brain - tax is there to "screw those with disposable income" that's why it increases as you earn more. Electric cars were included then specifically excluded because they were trying to incentivise more people to buy electric.

 

[paradigm]

Come on now, use big brain - tax is there to "screw those with disposable income" that's why it increases as you earn more. Electric cars were included then specifically excluded because they were trying to incentivise more people to buy electric.

Like I said though, if it really was a “screw you” tax, why not with banding so that buying a Ferrari Purosangue costs you more in additional “luxury” tax than buying a 320d?

 

[a1ex2001]

Like I said though, if it really was a “screw you” tax, why not with banding so that buying a Ferrari Purosangue costs you more in additional “luxury” tax than buying a 320d?

Because screwing the middle earners in there financed 320D’s etc brings in way more cash!