The UK's luxury car tax system is dumb and needs FIXING - here's how

[@oploupe]

For many cars in the £45K ballpark, this tax ends up being the equivalent of 1-2 additional PCP payments every year. It's bananas.

[@jamed63]

So in the future when buying a 2nd hand car, we will have to research not only the original list price was under 40k, but also if any extras pushed the price over 40k!

[@Dave-zk4fv]

This was my issue also, who will have that official record of the list price? Car dealer or the .GOV? Can see someone with the right motivation taking this to court.

[@josephloudon1728]

Even worse is that governments frequently change the rules, where we end up with the crazy situation where a 2016 Jaguar F Type 5.0 V8 costs about £760 a year for road tax, but an identical vehicle from 2017 pay £190 per year road tax. It is time the whole road tax system is reviewed and consolidated

[@NickAccount01]

and even worse, they can change it after the fact too! our run-around peugeot 108 is tax free now, which will go up soon...

[@billmoir1]

Completely agree with you in fact i just bought another car (used) and the first question i asked the dealer was what was the list price when it was new.I'm finally in position in life when i can spend more on a car but snookered with this luxury tax which i refuse to pay.

[@ianelliott229]

Tim, I’m with you. Until the 6 year limit on luxury car tax is abolished and it becomes permanent, I’m staying with older ICE cars.

[@alangravy27]

The Conservatives set this nonsense up and changed the rules to include EVe from 2025. It needs the be fixed urgently. Either increase the threshold with inflation for all cars. Increse the EV threshold to £52k. Go back to emissions based VED. Have VED as a percentage of list price and take away the cliff edge.

[@mrgrumpy771]

None of those - just have a simple flat rate

[@ChrisMisMYhandle]

Someone's bought a +40k EV 😂

[@dodgywheelsandropeywiring5697]

Or, just throwing it out there, 100 quid for every vehicle and parliament can go F itself. Also, that money could be spent on fixing the damn roads instead of being fleeced to pay for everyone else just because you need a car to get to work.

[@_Jonez_]

Tax per mile is best.

[@dodgywheelsandropeywiring5697]

@@_Jonez_ The other word for TAX is still theft.

[@AnyoneSeenMikeHunt]

Just cars? From here it seems the UK has so much dumb it's hard to see the trees through the forest of stupid rules. You lot need to start paying more attention to who you're voting for.

[@andrewbeamish]

As yet you haven't mention the 1st year road tax payment which on my X5 M50i in 2021 was £2450 year one, now ONLY (lol) £600 per annum (cheap compared to year one). Criminal as there was already a "luxury car tax" called VAT - the more expensive your vehicle the more tax you paid so the idea of a separate luxury tax is disgusting, plain and simple.

[@TimRodieDrivesStuff]

Yes, I forgot to mention the upcoming changes to first-year VED payments going through the roof for some cars

[@dougpratt]

I was thinking of a reasonably specced Škoda Elroq. Cost about £44k. Not now, tax too high. I’ll keep my Karoq for a lot longer.

[@teslataxi4546]

Why would you want to pay £590 in road tax? Government are scum.

[@markymarkreviews]

Yep, this is all we have been talking about. Apart from the broken NHS and broken UK in general! Things like this will be yet another killer for the UK economy. To build an economy people have to produce AND buy things. Why bother when you are being taxed on enjoyment? And as you rightly surmise, due to recent inflation, £40k is not a "luxury car" amount. It is a pretty bog standard car amount nowadays. Yes the manufacturers have to lower prices but companies are suffering to due to increased costs and wages.. What really irks is that the ECS/luxury car tax is applied retrospectively as well which is just plain annoying. When I buy something I buy with open eyes and am aware of costs going forward, now I am going to have to pay an extra £190/year for an EV bought in 2021. But £600 for 5-6 years on a new EV or ICE? No chance. Shame about that Yaris GR and countless other cars I liked the look of. Renault 5 should sell well though! VED should be based on things like size and weight and efficiency etc as not just cost.

[@jackbrown340]

I agree 100%. The car taxation system is broken.. I don't mind paying my fair share but as my car is over the 40k threshold I get pumped. I feel I've been subsidising these very heavy Ev's about time they pay their way. Jeremy Clarkson for PM or at least transport minister. 😄👍

[@leeandjancruise]

I bought my car used at six months old for just under £40K, now two years later the car is worth about £25k but I'm still paying £600 annual road tax, this is so wrong.

[@CarsofGlasgow]

its the same with those old petrol cars from 2007 etc, they are maybe worth £2-3k but you can pay £600-700 a year on tax (I am thinking v6 petrol citroen etc)

[@clareJCW]

Completely agree. The £40k luxury tax bracket is very outdated and needs increasing annually to take inflation into account. £52k would be a reasonable level. I can’t believe manufacturers aren’t fighting it before every budget.

[@Twmpa]

I feel sorry for the car manufacturers. Can you imagine trying to run a business in a country where the government will fine you out of existence if you have the brass neck to sell products to your customers that they actually want?

[@MrPeteJMc]

The different governments do tend to forget inflation in many things. The annual Christmas bonus for pensioners for instance. £10 Edward Heath brought it in in the 70s. With inflation it should be £120+ but the pensioners still only get £10. I own a Rav4 phev. Always plug in and only put £15 of petrol in every 3 months. Still have to pay £600 for the car tax though.

[@steveowen9740]

It's been out dated for some years now,but I really can't see the government changing it anytime soon ,obviously it needs updating to match inflation.

[@grahamcollins3003]

When it was introduced in 2017 you could easily negotiate a BMW 420D m sport below £40000 but for some insane reason the manufacturer never grasped the nettle and reduced their list price. I agree with what your saying about increasing the threshold to £52K but Rachel from accounts is skint and thus is the last tax cut on her little radar. Don’t get me started about tax thresholds and fiscal drag.

[@smiddlehurst1]

Completely agree with the current system needing a serious change ASAP thanks to prices heading up so drastically in recent years. That said it’s *really* worth doing your homework on cars that float around the £40k price point. Example: a Takumi spec Lexus UX from 2020 is a few hundred quid over… unless someone bought it with the standard black paint. If you’re looking at the used market it’s definitely worth spending some time working out what could and could not get a car under that £40k point.

[@no-oneman.4140]

The used market would also get a boost. I'd love to buy a Suzuki Across, used ones are just over £21k however I won't because of the luxury car tax. The fuel savings, running on electric for most of my journeys would be wiped out. Utter madness.

[@brodiep4360]

I have one. And the car tax is madness.

[@kjb1954]

Your dead right, but the government aint going to increase the level at which the tax starts any time soon , if at all. Ev3 gt line plus a colour other than the crap standard orange colour takes it over 40k. All the incentives have been removed for potential ev owners now.

[@lw2978]

You could get the Air version. More honest looking to my eyes, none of this gloss plastic cladding and you get cloth seats, not faux leather-this used to be called vinyl back in the day😅 I apreciate some might want some of the extras GT Line brings but I don't feel it's worth £3.5k more over Air trim.

[@brendanpells912]

Nobody needs to buy a £40K+ car, or a gas guzzler. You make a choice knowing perfectly well what the VED will be. What's crazy is that manufacturers are having to offer huge discounts on EVs to entice buyers, so why not reduce the list price to the discounted price? The objective should be to drive down the cost of cars.

[@CarsofGlasgow]

I think the objective for manufacturers is to make as much money as possible

[@teslataxi4546]

"Nobdy needs" ... OK Linus.....should we all by bicycles and drive around in 1989 Fiesta's...fuck off will ya.

[@CarsofGlasgow]

I was in a 408 last week, the price as specced was just over £47,000! (for a 1.6l hybrid)

[@michaelpapaioannou8921]

In Greece we have a similar luxury tax for the first 10 years of a car 💥

[@lauriebstokes]

This situation has stopped me from updating my car recently so I’ll keep running my Mercedes diesel. What the Government could consider is that with the potential for increased sales they would be collecting more in VAT.

[@yurikislytsia8596]

Until you hit a major repair bill on the engine, gearbox or electronics costing you a few thousands of pounds. I will keep my diesel for a long time only works if you drive average UK mileage 6k per year, keep it in a garage and have a non turbo engine without design gremlins

[@BlackLines]

@@yurikislytsia8596 a few grand of repairs is still cheaper than buying a new car...

[@peterthwaites5891]

Well said Tim... i also believe that when that 40K new cars value drops below 40K at some point in it`s 1st six years (likely within the first 6 months!) then this ridiculous super tax should no longer apply to a 2nd hand vehicle...

[@Vincentio_J]

You are still lucky in the UK. Here in Belgium yearly tax for a 2 lit car is approx. 450 € , 3 lit 1150 €, 4 lit 2700 € and a 6,7 lit V12 (RR) would be 6600 €. We have also a registration tax that can mount up to 15.000 € for big V8 cars. Electric is free for now also for a Spectre 😀.

[@CarsofGlasgow]

so a 2 litre isn't too bad then over there!

[@SweenBeanUK]

My 2015. Golf 2.0 TDI. £30 a year tax. 👍. I think people’s biggest gripe is paying that much per year and the roads still being terrible! Can’t actually see what their money is paying for. Fix all these bloody pot holes!!

[@nicholaswilliams4532]

The government only uprate things for inflation when it suits them the winter fuel allowance wasn’t updated the benefits £10 Xmas bonus has stayed the same since the great flood I think mps salaries haven’t been left the same for 25/30 years the £10 Xmas bonus has been the same for 52 years

[@1972jjb]

Maybe this will incentivise manufacturers to plan/price more of their UK market vehicles at just under £40k full list price? (Though £40k isn't that much at todays inflated prices and probably hard for western based manufacturers to make good EVs for.)

[@ML-qk1px]

Along with fiscal drag on our tax limits, this car tax situation is just mad. Remember when we all paid the same, and each April it went up by a fiver?

[@gordonatkins9135]

Hi Tim good video thanks..where does our road tax go, certainly not on the roads…

[@TimRodieDrivesStuff]

I think that's why they don't call it a road tax!

[@Paulruk]

My wife’s little petrol Mazda is no road tax, yet my Vw iD3 which also isn’t very big and cost me £13k used , although heavier is £195 tax. One emits toxic fumes whilst sat outside the school the other emits nothing but some road noise from the tyres. I certainly don’t mind paying road tax on an EV but there needs to be some common sense here and to encourage EV ownership and reduce cars running on fossil fuels.

[@tomstc]

It's mental! I'm so relieved my 2021 mondeo was under that bracket

[@ChrisMisMYhandle]

You described me perfectly in the first 20 seconds

[@TimRodieDrivesStuff]

Thank you for the comment all the same! Just leave the porcupines alone 😜

[@Dungshoveleux]

No its not for the first 6 years because the 1st year is really high initial VED. The next 5 years is the standard VED PLUS the £40k extra VED if applicable.

[@78Outlaw]

Bob on Tim, we leased an EV for 7yrs, hybrid for 7yrs prior that, replacing April and going for a sub 40k hybrid petrol next as tax puts me off as does the range loss through life of the EV, about 20% in our Kona E over 3yrs and 30% in winter 🤷‍♂️ really like the CH-R GR to get the awd but tips over the 40k so going for a Nissan Juke hybrid instead

[@nicholashills6972]

Well said mate, absolutely correct

[@1959ticktock]

We just leased a Kona electric, list of somewhere in the £39,000's. Can't call it luxury. Had a BMW before, and worlds apart. Not that I'm complaining mind, it's got loads of cool tech. But my first foray into electric territory and I had to spend shitloads. The government wants this. The government oils the wheels of business to buy electric, but this tax penalises little private me and mine for aspiring to do what the government wants. The likelihood that people like me will support the government inevitably goes down. Lot of private car drivers out there, mr government.

[@georgimihalkov4781]

£40k is definitely way too low for a luxury car tax, it should be way more, or removed entirely. But whatever the tax is it should apply to all cars including EVs.

[@TimRodieDrivesStuff]

It will apply to them from 1 April, mostly

[@Michael-p4f2n]

The luxury car tax should be on proper luxury and it should scale with the value of the car. We live in a world where the average person is food insecure and rent burdened but every single $3 million dollar car sells out instantly and then sells second hand for $5 million.

[@ISuperTed]

A Golf GTE Hybrid is £42k - not exactly a luxury car!

[@danielcooper6423]

Imagine buying an EV for over £40,000 having to pay £600 a year for it and then a year later finding out that car is worth £15,000 😅....I'm guessing the tax is only based on what the car is worth when you bought it? I can't work out if the government are corrupt or thick? But man they make the Tories look good.

[@darrentatemusic]

@@Michael-p4f2n100%

[@david1731048]

Income tax thresholds, car tax, VAT threshold, you name it. Fiscal drag is killing us all.

[@drevo50]

The cliff edge is nuts, as is the Ferrari owner paying the same VED after the first year as the EV3 driver. Just make it a %age of the list price and be done with it.

[@HighlandRider]

Was recently looking for a car, used in my case but looking round showrooms at what i consider ordinary cars, by that I mean not premium or luxury, and amazed that they were incurring the 'Luxury Car Tax'. OK if you are buying a Beemer?Merc/Audi etc, but Renault? It is another stealth tax and how long will it be before no family sized car is under that £40k limit?

[@michaeljohnson4975]

Does not bother us as our cars are £30 and £170 VED. Made 2009 and 2015 .

[@simbo52bn22]

What about - additionally - the rises that are coming in 'first registration fees' from April 2025 on top of the luxury car tax???

[@CarsofGlasgow]

yeah that additional first year registration is getting out of hand, I was driving a Toyota before Christmas there. If it was registered after April 2025, the 1st year tax would be over £5,000!

[@petergrant6484]

I agree it’s outdated. Which is why I ordered a new Polestar 2 this tax year and not next. Tax was free this year but will be £185 after April 2025.

[@andrew-o5i]

if you are purchasing a electric car you need to buy before april , i bought enyaq vrs which is now 1 year old and was 53k , have had free tax but after april will be paying tax but not the supplement though .........

[@sevesellors2831]

These tax bands are insane and bringing this in for EVs will be the kiss of death. Still used car trade should prosper. In France they killed off any cars over 2 litres with tax so as consumers just boycott any cars that hit the £40,000 mark, things would change if only consumers voted with their feet I apply this on many items . I’m just not going to be ripped off especially as a pensioner.

[@gravemind6536]

The car market is collapsing already the average age of cars in the UK has gone up 1.5 years, mechanics and breakdown companies are getting more work as people are keeping cars longer. Pre 2017 small petrol cars are not even depreciating anymore everyone wants them to avoid all this tax madness. Struggling to sell EVs and now the last remaining incentives are going no private buyers are going to want them.

[@markpowell4242]

Well said Tim great video as always. Also what I don’t understand is that I’m looking to purchase a 2019 bmw x3 40d. It had great spec and god knows what the cost of it when it was new I assume a lot. So when I buy it for a lot less than the original price why am I hit with the higher tax bracket. As I didn’t pay the large amount for it. Just doesn’t make any sence. All this will do is push up the prices of cars before 2017

[@TimRodieDrivesStuff]

The second-hand thing is insane. At my day job (Motorpoint) we have some Peugeot 408 hybrids that are less than a year old, have 1000 miles on the clock and are £25k. Yet they incur the luxury car tax because they were £42k last year...

[@markpowell4242]

@ I agree it’s insane to pass the luxury car tax onto a second hand cars when the next buyer didn’t pay over 40k for that car. It will just mean people will buy cars older than 5/6 years and save the hike in tax.

[@V_Dubya]

Absolute sense once again from our favourite fashionable man with the chrome dome. Increase ICE threshold to £50k and EV to £60k. The market is haemorrhaging Rachel! (BTW, love your bob girl)

[@kimberley3813]

On one hand you could say it isn’t that bad - it’s a luxury tax for 5 years from the second time the car is taxed, ish, checking the plates on some luxury cars it’s obvious there’s some element of manual processing involved and the rules even confuse the people who are supposed to set it up - e.g. I’ve seen a 20 plate car with the rate due to expire this year, so that’s only 4 years from the second time it was taxed then. On the old emissions based system there was basically a permanent luxury tax when bands L and M came in, because they are out of all proportion to what cars in K are charged (and cars that would be L or M but are older than those bands are charged as K presumably in recognition that manufacturers didn’t know as much about how to get emissions down then so there would be cars that aren’t performance cars falling in it - and those who can’t afford newer cars shouldn’t be clobbered.) However, the premium was £310 until recently and there are people currently paying it who bought or leased a car expecting it to be £310 + £180ish increasing with inflation to tax. The premium didn’t move for years and then goes up by 32% in one go. At a minimum, the threshold should have become £50,000 when that £100 was added. To stop manufacturers gouging, I would put bands into the additional rate so that there’s still a pressure on them to keep costs down to make the cars easier to sell. At the moment it’s a cliff edge and you’re either over or under. Or just everyone pays x per g/km emitted - but as emissions have been going the wrong way since the 2017 system started, that would initially clobber the owners of newer cars. The previous administration were stupid to think that a first year emissions rate would do anything - if you’ll have to pay £190 tax anyway you might as well have the car that you want rather than an alternative you like less with lower emissions. I’ve no experience with new cars so please correct me if I’m wrong but isn’t the first year tax rate built into the list price of the car, so people would take even less notice of it than if they actually had to go onto the govt website or to the Post Office and pay it themselves - and Labour turning up and putting a 1 in front of some of them and doubling others is making it more likely that any given car is pushed over £40K. Or they should say a Vauxhall Astra should never be a luxury car, a Jag should always be one and work the supplement that way. Thinking that anyone will still buy new EV’s when they are subject to the same luxury limit as cheaper ICE cars is nuts - at least work out a separate threshold for luxury on EVs and hybrids and incentivise them that way. The only thing it does do is make people look seriously at how the batteries of used EVs hold up or might cost to replace, as tax will be £10 for one of those. I wouldn’t be surprised if the reason average emissions have been ticking up again has been that the hybrid discount was only £10, so on the new system you might as well go ICE or EV and pay nothing. Some hybrids currently have the problem that EVs will from April - it costs more than an ICE to buy, so you get clobbered with the premium for trying to be better for the environment.

[@AL-ib3lu]

I know you identified that by implementing your uplift to the £40k starting point it would reduce the amount of money for the treasury. Unless I missed it, you didn't offer a solution for the treasury (we're broke). The same for incentives, the country just can't afford it.

[@demiquadfpv3333]

Use your influence and audience to create a proper government petition so it gets enough signatures to be discussed in parliament. New limits are needed with 3 year reviews as a minimum.

[@markhomer6357]

Totally agree over the astra comment, have you approached your local mp for feedback ? and is god forbid they are labour as won't have a back bone to argue your case?

[@stevenbatley8666]

Most lease or PCP cars,very few would put their hard cash into a Depreciating asset!

[@martinday2815]

Not enough space in comments to express my feelings on this. I bought a used car that was 40k or so new, but used cost 28k. I could have got a hybrid for same money but still was in 'luxury car tax' bracket. So stuff it, I got pure petrol and have fun. Thanks for bringing this up...nothing will change though, too much a cash cow.

[@alastairhoffmann9079]

The RFL system is conceptually broken. It used to be viewed as a fixed contribution towards road building and maintenance of having a vehicle on the UK roads, with the variable element being collected on fuel duty. It used to be quite simple - basically is it a motorbike, car/van, bus or lorry and this determined the charge. Looking forward it may be better to base this on wear and tear --where there are two factors that determine how much wear and tear a particular vehicle puts on the road system - its weight, and the mileage driven. From this it many be better that the fixed element charge is based on a taxable weight, which might be the weight of a vehicle plus the deemed weight of a driver plus the deemed weight of 65% of its passenger load plus 65% of its maximum freight capacity. This partially solves the fairness issue, except electric cars still have a massive subsidy, as they pay no fuel duty on the electricity used to power them and they provide a massive benefit in kind gain for those lucky enough to have an electric car as a company car.

[@davidross2598]

hi Tim, I'm 55 , and my youngest daughter has 2 disabled children. I bought her a second hand cupra formentor hybrid for 18k , it cost me every penny I had , but she needs a safe reliable car, and the 40 miles electric mode will cover most of her daily stuff . TO MY HORROR ,THE ROAD TAX IS COSTING £580 A YEAR !!!!!!!!! HOW CAN THIS BE LEGAL !!! OUR NABOUR HAS A RANGROVER 4.4 V8 THAT COSTS LESS THAN THE 1.4 HYBRID !!!!

[@carfleet6703]

Because the car tax rules are not retrospective. Each time the system changes the old system for the older cars remains in place. Otherwise it would be deemed unfair and entrapment if they set a tax of (say) £30 on a car, enticing someone to buy it, and then later upped it to.£600 with a later rule change. This is why our 64 plate diesel insignia is still only £40 car tax. The system changed in 2007 and then again in 2017. Unfortunately your daughter will need to pay the £580 a year until the vehicle is 6 years old. Then it will revert to only £190 (+inflationary rises). Just the same as a new vehicle I have just bought.

[@carfleet6703]

Actually, just read on the govt website that if you are registered disabled, you may be able to get the car tax reduced. Look upnthe page "vehicles exempt from vehicle tax" on the gov website. Copied from the website: "Vehicles used by a disabled person You can claim disability exemption when you apply for vehicle tax. Find out if you’re eligible and how to claim." If the children are registered disabled. This would be worth pursuing.

[@nickandsue1]

it should have gone up line with inflation year on year...just like car prices! its insane its remained the same while everything else has gone up

[@michaelmoss5745]

Your spot on 👍🏻

[@limitedmark]

I don't think anyone hates EV cars, most are very nice and drive great , I think people hate the uncertainty with them, price , depreciation, charging and now the government has done away with any incentive. They are not very encouraging with our energy pricing going up and down and public charging costs. The sales need stimulating by the government with incentives.

[@mw8653]

I agree just got an EV second car for work commute and town driving going from £0 to £195! VED in April my 2014 Avensis 2.0d will go up from £30 to £40 makes no sense on any level.

[@Twmpa]

I certainly do not hate EVs. Although I would never have one personally, I do believe they have a place in the car market, as long as the demand is there, as part of a wider consumer choice rather than being rammed down our throats by politicians on the basis of false ideology. However, I very much do not believe that they amount to a viable replacement for the internal combustion engine.

[@limitedmark]

@ I agree, like i have said many times the green agenda is overhyped in the UK. If the UK sank into the sea tomorrow it would have no affect the words climate problem. (1%)

[@davidedwards5920]

100% agree with you but this tax process is standard practice for governments. Introduce a tax that doesn’t effect many at the start then don’t increase the threshold over the years to keep up with inflation with a result of most people now pay the tax, and there we have it another stealth tax festering in the background. 🙄

[@indetailcarcaresolutions3770]

In Australia, from memory, the luxury car tax was $64,900 when introduced. Not sure when it was introduced, but it was a while ago. I read somewhere recently that it is now in the vicinity of $91,000. It is not adjusted for inflation, from what I can find out, but reviewed regularly with inflation as a guide. It seems that besides cricket, the far of colony has another one over the HRH land of H&G. Lloyd (yes, I know its a Welsh name, but with British Gand parents, what hope did I I have).

[@TimRodieDrivesStuff]

And you gave us Bluey!

[@stuartslyper1479]

The low historic inflation rate (until recently) has resulted in many irrational cliff edges in UK tax law and benefits. Countries who’ve traditionally had higher inflation rates know you can’t just set a hard £ amount and leave it unchanged each year for a decade.

[@ChrisMisMYhandle]

With ploicies like that, you're my favourite politician, Tim ❤

[@mr.earthguy]

100% I am currently looking to get a new car as I'm starting a family and need a bigger vehicle. Yet I am finding it hard to find a decent family SUV with all the bells and whistles for under £40K. I don't even need a brand new one.... would happily pick up a 2023 model of a car which had a MSRp of 40-45 and now can be purchased for sub 30.... but it's that stupid tax which is putting me off.

[@philipjames3526]

Or... You buy an MG!. Absolutely in the same boat. Love an EV. But 600 for a luxury car that isn't an E Class .

[@mr.earthguy]

@philipjames3526 I've heard MG's are great value but they are littered with reliability issues when it comes to their tech and infotainment stuff... Two of my friends sent them back cause they kept getting problems with software updates messing up their software. I'm seriously interested in the BYD's

[@demiquadfpv3333]

Seal udmi if you really just need transport. Apparently not a very engaging drive but otherwise it's amazing value. Basically an EV with no range issues.

[@philipjames3526]

@@mr.earthguy sorry, I meant to add a winky face after MG. There is no way I'd buy an MG. I read that MG proudly employs 68 people in the UK. Ok, other companies need to be more efficient in their work force. But how are supporting local workers by just blindly buying Chinese crap. I know. Tinfoil hat 🤣🤣🤣

[@mattmckeon1688]

How does it work with a model of car that cost under £40k in 2018 but later exceeded that by 2021. Would identical spec cars of different ages be treated differently because of different original sale prices. That's a lot of historic price data required to assess a tax.

[@carfleet6703]

It is determined at first registration whether the luxury tax applies. After that it remains the same until the 6 years have elapsed. So yes, if the price of a new car has risen for exactly the same specification, it is quite feasible that a (say) 2020 one won't need to pay the tax whereas a 2022 one would.

[@craighudson6684]

A good, well reasoned argument. Sadly I’m not am not convinced that politicians of any persuasion and reason are bedfellows. My favourite politician? Jim Hacker 😜

[@neilhaughey6869]

Country is run by treasury officials and BoE, both allied with senior civil servants that are anemic to change means any government will only fiddle around the edges on domestic policy.

[@markbloxham1313]

I think there will be a shitload of new EV's registered by the dealers in March to avoid this tax. That''s if they don't scrap the tax for EV's bearing in mind they do want a transition.

[@felawes]

I'm mystified that anyone buys a new car.

[@stevenlawrie7819]

Don't forget EVs also have to pay £190 a year for all those sold since 2017. So a new £40k EV from April will be £790 a year!

[@philipashley1517]

Well said👍

[@alanrutland4424]

Oh Tim, wouldn’t it be great if governments actually think. Do bear in mind that the tax personal allowance was frozen in 2021-22 and now goes on to 2028. So there is no chance that this government will do something like this. Of course this tax is set on to low a car value now but we are stuck with it because they do not ever see the wider picture. Take the employee NI raise. Not a talk on working people mind. 😊. But we are the ones that will pay for it.

[@deputydd4364]

Whilst I 100% agree with Tim the cliff edge luxury car tax is nothing compared the the cliff edges on other tax allowances about child benefits, pensions, higher earnings etc. All these make £410 a year car tax insignificant. (Though I assume Tim is set up as a private company and pays himself differently to a PAYE person so won’t realise this!)

[@TimRodieDrivesStuff]

Oh trust me I know about the 30 free hours cliff edge etc! It’s ridiculous (I’m PAYE with sole trading mixed in for my YT)

[@krzysztofwasiak2018]

Ireland 2400 euros or about 2000 GBP for cars with CO2 emissions over 225g per year forever... So cars like M5, RS6, Mustang V8 etc.

[@MiniEggs1999]

I think the person buying 45k car is annoyed by the tax but can pay it. Three years down the road that same tax on a 20k car looks expensive compared to on a year older which will affect resale values and in turn PCP will get more expensive as finance companies will have to drop minimum values and first users have to pay more depreciation

[@anthonydevono8833]

Vehicle tax has never been fair in the uk it isn’t going to change any time soon just another tax

[@mrmarrow8918]

I agree Tim. You’re the BOSS :)

[@tonyg8047]

Wasn't this tax only meant to last for its first 4 years? When was it increased to 6 years?

[@TimRodieDrivesStuff]

It's 5 years after the initial high rate of VED you pay on purchase

[@david1731048]

Yeah they band around "5 years" but 5 years *from* the first time you re-tax it. So, 6 years. Absolute bastards 😂

[@stuartcarlton7939]

Absolutely agree. It seems the Government simply cannot get to grips with the conflicts in its own policies! EVs are an essential part of the drive (sorry!) to net zero and we were being encouraged, indeed induced through grants etc, to buy them. What happened to that? It defies logic that this tax hasn't been adjusted for inflation or that EVs have some exemption, oh, sorry I said logic and we are talking about the Government, silly me!

[@dcj2dan]

It’s the fact that tax lasts 6 years! So even if buying a 3/4 year old one which has lost all of its value you will still incur it which is massively off putting. I could cope with it if it was for 3 years. You could then pick up a three year old previous lease for a good price and not have the added tax. I think it’s the death of the EV. there just isn’t an incentive now. I’m currently looking at 2019 diesels and planning on running my older car for longer than I ever used to. The golden era of low interest rate PCP’s on new and used cars has gone and I suspect some manufacturers will go with it.

[@gravemind6536]

2016 Toyota Auris 1.2T petrol 50mpg+ and £35 a year VED, why on earth would I get another car?

[@carfleet6703]

EVs are currently exempt from the 'luxury car tax' of £410pa. Though I think I have heard this may be changing. Copied from the govt website: "Vehicles with a list price of more than £40,000: You have to pay an extra £410 a year if you have a car or motorhome with a ‘list price’ of more than £40,000. You do not have to pay this if you have a zero emission vehicle."

[@timrodierides]

Yes that’s changing in April 2025 for cars registered after that date

[@danielcooper6423]

I think if you own an EV over £40,000. The tax is the least of your worries. One worry being the depreciation

[@Jules-kv2sf]

They're just trying to tax the motorist as much as they possibly can, inventing new ways to get you paying more of what you can't avoid in every way possible, so not just the old stuff will dissappear of the roads quicker but new stuff won't be economically viable or justifiable for most logically critically thinking normal people, most cars are over £40k go figure

[@jlevace]

All Cars should be taxd on weight, Plus electric cars an extra amount based on how much Fuel Duty they would have paid. Based on £200 first year, Then the next based on mileage of previous, Etc etc, With refund if less miles done,,, Or something like that

[@ic2433]

What you want and what you can afford are two different things. There are cars out there for all buyers which are cheaper however people still want a car with the right badge. I do agree with you but I just feel there are still many badge snobs out there.

[@prw9]

Why should EV’s get cheap road tax. They take up the same amount of road space, they’re heavier than most ICE cars and they’re bought by company car drivers who do way more miles than private car buyers. They should be paying the same if not more road tax !!!!

[@lw2978]

Maybe the tax should be dependant on the size and weight of the car but then you get a variable incentive from the government that is determined by its efficiency, emissions and ethical use of materials/production (use recycled materials/energy to make, transportation costs). I guess that would be a major pain to set up and monitor, with some manufacturers "fibbing around the edges" regarding their vehicles...😆

[@thomaschetwood6249]

Because replacing ICE vehicles with EVs improves local air quality, especially in urban areas.

[@TimRodieDrivesStuff]

Someone didn't watch the video. It's not about EVs avoiding tax...

[@Dungshoveleux]

Its just making VED complicated. Of course making EVs pay VED will mean that many £40k+ EVs will become liable for this expensive car tax. And since its business taking most of the new EVs, its going to affect inflation as business puts its prices up to cope.

[@benj5386]

Legacy manuracturers are being fiscally rogered by the chinese undercutting them. If the luxury level got raised as per your example, I cant imagine there is much incentive for legacy companies to put the price of normal cars up for a price gouge. That would just make the chinese brands even more appealing. But what do i know? Im just an idiot on the internet.

[@shieldaigbencher]

I just leased a new ev list price £37000 to avoid this tax. Public charging rip off pricing is slowing ev take up as much as this tax. I can charge my car overnight at home for £2. The same charge on a public charger is £25. Mad.

[@CaiSpidox]

Completleu agree, government short sightedness is a constent problem..suppose when you dont live in the real world it happens.

[@NorthDevon-d5y]

The government is turning the screw on car manufacturers…. Sales already sluggish will plummet.. there no incentive now to do well and aspire to get the car of your dreams

[@thomaschetwood6249]

You’re right that the luxury car tax is dumb, but I am not sure that increasing overall new car sales should be a direct goal. Presumably governments wish to be re-elected (though you do sometimes wonder), and so improve our welfare without bankrupting us. The economy is fundament to welfare and for it to run smoothly transport needs to be efficient, yet remains a major source of pollution (bad for our welfare) so they need to balance traffic flow, congestion, cost of building new roads and emissions. Income from fuel duty (~6% of UK tax revenue) will inevitably decline as the number of EVs rises so that income needs to be replaced. How do they maintain tax income while encouraging the replacement of the UK car fleet (NOT necessarily its absolute growth) with more efficient, cleaner cars? I don’t know but a tax based only on an arbitrary nominal selling price of a car bearing no relation to its efficiency, use or what it is replacing is not the answer. P.S. Love the idea of an E39 BMW M5! I hope an old Caterham is in my future too. P.P.S. Favourite politician? Joe Robertson

[@jameslowry1]

I don't hate BEV or ICE cars NO I hate the Government for forcing us to pay them in tax and that is just for keeping and owning a car never mind the cost running and insuring a car where you are taxed again

[@petermervyn9263]

I want to get a new car but I won't buy one because I resent paying the luxury car tax. This would be for a car that I would not class as luxury but would come in over 40000. This tax is a joke, and at the very least should be adjusted in line with inflation.

[@johnhaynes9910]

Dear Tim, I knew this wasn't going to go well, I blame the new jacket, bring back the tartan horror ! But seriously, this was always going to happen due to the amount of tax revenue raised by ICE vehicels, EVs got away with it for longer than I imagined before getting caught in the net. You are correct, increase the £40k by inflation and the motor makers will up the price to match. My guess is that in the UK and EU, the only car plants that will survive are those that make very, very expensive models + £100k and everyone else will eek the most life out of older ICE cars or buy Chinese.

[@wolverine1981pl]

goverment is in panic and looking for money everywhere. and always best way is to put more tax on car owners

[@GarryM66]

Stealth tax because you can afford more than 40k for a car is just wrong. It should be based on CO2! Even a top of the range Mini EV will get clobbered. Sorry but a stealth tax is just wrong and people who earn more already pay more PAYE in the first place not to mention all of the other money they spend. We all use the roads so we should all pay the same and the only difference should be based on CO2 on the environment.

[@kalex381]

ICE owners already penalised for emitting CO2 by paying half the cost of litre of fuel in FUEL DUTIES. When I fill my car and it costs £100, half of it goes to the government. Road tax should be same for all cars since we all drive on the same roads…every thing else is pure discrimination.

[@rotorhead5006]

I couldn't afford a £40k car... I bought a 4-yr old car... but still get stiffed with the luxury goods tax. If anyone in government had an active brain cell between them, they'd have recognised the gaping hole in their logic!

[@pigeonpoo1823]

Bait and switch. Classic tactic. Same will happen with electricity tax. Currently 5%. Wait til it goes to parity with petrol (80ish%). Now where's the cheap fuel? Net zero will be achieved by taxing people completely out of cars!

[@Apy1-r6e]

It’s a stop gap until they can bring in pay per mile as otherwise if everyone had an EV there would be no money to maintain the roads!

[@NotJanine777]

Maintain the roads? When did they start doing that…?

[@IwasBraveFor2WholeSeconds]

My favourite politician is Starmer in a country mile..