Tax hikes on eco friendly cars

New tax rules due to come into force on 1 April will add more than £500 to the long-term running costs of Britain’s most popular and eco-friendly vehicles.

This is according to consumer motoring site HonestJohn.co.uk, which also says the new tax rules will benefit some of the most polluting cars.

For example, the UK’s best-selling car, the Ford Fiesta 1.0 EcoBoost 100PS, will cost £540 more to tax over four years, while buyers of the V8 Mustang stand to save £245 over the same period of time. This is despite the fact that the American muscle car emits three times more CO2 than the efficient Fiesta.

Until now, the government has offered zero VED to entice car buyers into eco-friendly vehicles; however, with 74% of new cars emitting less than 130g/km of CO2, the government has made a U-turn on its policy and introduced rules to force buyers of new, efficient cars to pay more.

Under the current tax rules, vehicles that emit sub-99g/km qualify for zero VED for the first year and pay nothing for every year after. However, from 1 April the government will replace the current 13-band tax system with three new bands, zero, standard, premium, plus a surcharge for electric cars with a list price above £40,000.

This means all new cars bought after 1 April with sub-99g/km CO2 emissions will pay for road tax. Even hybrids won’t escape, with buyers of the Toyota Prius paying an extra £405 over four years, while Tesla S buyers will have to pay an additional £930.

Honest John’s managing editor Daniel Powell said, ‘Many motorists are unaware of the changes that are coming for VED, but the fact of the matter is this – the system is changing, and low emissions cars won’t be as tax efficient as they were before. It’s a bit of a mixed message to increase tax on fuel efficient cars while reducing it on less eco-friendly models when the government is trying to increase the uptake of low and zero-emissions cars.’