Financial News |
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By Szu Ping Chan
Cars, oil prices and fuel duty have been giving Gordon Brown a rather big headache lately. As disgruntled lorry drivers blocked London roads this week in protest against this autumn's fuel duty rises, Gordon Brown and his Darling have once again hit the headlines -- this time, over road tax. Following the government's recent U-turn on the 10p tax band, backbench rebels are now campaigning for a reverse on the rise in vehicle excise duty (VED) set to come into effect next year, claiming some of the poorest families will be hit hardest by the rises. So what exactly is the fuss all about? And more importantly, what can you do to tackle it? VED Explained Under the current system, cars are divided into seven road tax bands, ranging from £0 for the lowest emitting cars to £400 for the most gas guzzling. From next April, car groups will be split into 13 new bands, with the highest road tax band increased to £440. In addition, from 2010, the worst gas guzzlers, with a CO2 emission of over 255g/km will see their road tax leap to £950 in the first year. This is because of government plans to launch a showroom' tax, payable in the first year to penalise the worse offending cars. The good news is that if your car emits less than 150g/km of CO2, from next year your VED will either come down or stay flat. But while this will be welcomed by the smaller car owners among us, as well as hitting the worse offending cars, the changes will hit the pockets of a lot more people, including family-orientated cars such as the Vauxhall Zafira 2.0i, the Ford Galaxy 2.3i Zetec and the Vauxhall Vectra 2.8i V6 turbo, which will all see their road tax nearly double from £210 to £415. In this way, rises for family cars such as those mentioned above will in some cases outstrip those for Porsches and other gas guzzlers, which will only rise by £40. A Retrospective Reprimand Personally, I think that higher road tax for the worst offending cars is a good idea, because let's face it, if you buy a real gas guzzler, you can probably afford to pay for it. However, what I find slightly unfair is the fact that the tax is being introduced for retrospective purchases. This means even if you purchased your car before the measures are introduced, the new car tax rules will still apply to you, as all models purchased after March 2001 fall into this new VED trap. This seems harsh, as even if, like millions of unsuspecting motorists, you bought what you thought was a rather modest model back in, say 2003, you would now be hit with these changes. To put it into perspective, here's a quick idea of how the changes might affect you. Looking at the top five cars according to The Society of Motor Manufacturers and Traders (SMMT), here's a comparison of what you'd pay now compared to next year:
So, if you want to dodge the new rises, you may want to consider buying a car built before the VED cut-off point in March 2001. For example, one of the most popular second hand cars, the Ford Escort stopped making new models in 2000, so any used Escorts would fall under the old rules. An X or Y reg car may not appeal to everyone, but could be a viable alternative to those wishing to avoid the VED charges, as the maximum you'd pay in car tax is £185. So, whether Darling stands his ground or not, in the mean time, car costs are set to increase even further. Regardless of whether you go green, or bear the brunt of the charges, I doubt Darling's plans will overhaul the way we drive. However, it should give us some food for thought next time we're in the showroom... Drive A Brand New Car For Less / Ditch Your Car and Save £2042 Copyright © 2008 Fool.co.uk - Money Saving Team. All rights reserved. |
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