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.’