How To Save More Than £1,000 On Your Car With New Car Tax Rules
Whilst the coronavirus outbreak has cast a shadow of doubt over much of the UK’s retail sector it is still possible to purchase a brand new car – but you should wait for the delivery of it until after restrictions are lifted. Despite dealer forecourts being closed there are still ways to get your hands on a new car without meeting with a dealer face-to-face; and with a big change to the way car tax is calculated just around the corner, now is the time to get to grips with the market, as drivers could be set to save well over £1,000 on car tax – if they act quickly.
Our partners over at Auto Trader have created the following guide for UK based buyers to understand the tax changes – which could help motorists save up to £1,285 on a new vehicle – and how to make the transaction safely.
What is changing?
On 6 April 2020 changes to the way car tax is calculated will see the cost of buying a new petrol or diesel vehicle shoot up, as the Government continues its efforts to deter the purchase of vehicles that run on traditional fuels.
Car tax is calculated based on the vehicle’s CO2 emissions – but as of 6 April the level of tax will be based on a newer, more accurate method of emissions testing known as WLTP (Worldwide Harmonised Light Vehicles Test Procedure). This means many traditionally fuelled models will report higher levels of CO2 and therefore fall into a higher tax band – which may be hugely frustrating for people who are saving up to buy a new car later this year.
What is WLTP?
Over the last two years, this newer form of emissions testing has been put in place to provide more accurate results, with emissions calculated based on real-world driving rather than in a controlled environment. The previous method of testing known as New European Driving Cycle (NEDC) had a series of loopholes that meant the CO2 readings were lower than they would be on real roads.
For instance, using NEDC, testers could get away with testing a vehicle at 1.2mph lower than the required speed, with lights and air conditioning turned off, and the passenger wing mirror was even allowed to be removed to reduce resistance. The increased accuracy of the WLTP test means more vehicles are now recording higher levels of emissions.
What does this mean for car tax?
As a result, the WLTP test results will mean less efficient petrol and diesel models will be penalised and pushed into a higher tax band from 6 April, so those in the market for cars with traditional fuel types could save significant amounts of money by buying a new car before 6 April, when the steep hikes in tax will kick in.
The tax you would pay for a newly registered petrol or diesel car after 6 April could be as much as £1,285 in the first year for certain models, such as the Audi Q5, or £960 on a Mercedez GLE for example.
But it’s not all bad news, there is good news for those looking to get their hands on a new electric vehicle (EV). The changes mean buying an EV could eventually work out cheaper than purchasing a petrol or diesel car, as they emit no emission and are therefore exempt from tax.
The changes are also good news for those looking to buy electric company cars, as the benefit-in-kind rate for these will be 0%.
How can I buy a new car safely whilst coronavirus is spreading?
With the nation currently in lockdown, we’re finding many potential car buyers are using this time to research their next car and speak to dealers to find out more information.
A poll of 2,398 visitors to the Auto Trader website found that despite it not being possible to visit dealerships in person at this time, 29% would still like to be able to contact a dealer and of these 27% would like to book an at-home test drive for when it’s safe to do so.
Some may even be ready to put down deposits. Depending on the retailer it may also be possible to have the car registered before the changes come into effect on 6 April and arrange for a later delivery – something which 31% of those looking to speak to dealers before the deadline would be interested in. People will still need to wait to take delivery of their car until the UK government relaxes the lockdown period – unless of course they are a key worker that needs their car to go to work.
A number of brands are also set to offer price protection on orders placed now and registered in future, to help those in the market for a new car make the most of the pre-tax prices.
Once you’ve found the car you’re interested in on Auto Trader, check directly with the dealer by emailing or calling them, to find out what services they can offer, and you can find out more about how to buy a car safely during the coronavirus outbreak here.
Who will benefit most from buying before the deadline?
Anyone in the market for a new SUV will benefit the most from buying before 6 April, as larger engines will be hit hardest by these tax changes.
Those who do lots of long-distance driving may find a standard diesel model best suits their needs and should also look to buy before the deadline to save themselves a tidy sum.
Anyone purchasing a car that falls into a higher tax band after the changes could look to pay anything between £20 and £535 in the first year, depending on the specific model. From year two onwards, drivers will pay a standard rate for petrol and diesel models of £145 per year.
Auto Trader has researched some of the best deals on new cars ahead of the tax changes which you can view here.
Who will benefit most from buying after the deadline?
After 6 April there will be a big shift in favour of electric vehicles for both personal vehicles and company cars as those buying new electric vehicles are exempt from paying any tax – ever (unless further tax changes are introduced in future). This is also the case for cars powered by a hydrogen fuel cell, so the roads are expected to become a lot greener over the next year.
In other news, following the 11 March budget announcement, more expensive electric cars (costing in excess of £40,000) will no longer be subject to expensive supplementary costs of £320 each year for the first five years – meaning drivers can now save £1,600 on the cost of a brand new electric over five years. This new ruling will come into effect from 1 April 2020.
The Budget announcement also revealed that the Government’s Plug In Car Grant (PIGC) will be extended to the financial year 2022/23, to offer a grant of £3,000 to those looking to purchase an electric vehicle costing below £50,000, which is great news for anyone hoping to get their hands on an EV.
For the latest information on how drivers can stay safe during the pandemic, visit: https://www.autotrader.co.uk/content/features/coronavirus-advice-for-car-owners