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CAR TAX INCREASE 1st APRIL

CAR TAX ON NEW CARS FROM 1ST APRIL

In the last Government budget a new taxing system for new cars was announced from the 1st April 2017. So what does this mean for new car buyers.

Every new petrol or diesel car now has an initial tax on purchase. Followed by a standard road tax of £140 per year for any car under £40,000 (all Mazda's). The initial road purchase tax cost depends on the cars CO2 emissions. So for Mazda UK buyers most Mazda2 models will cost £140 - £160 to tax. With the CX-3 and CX-5 models ranging from £160 - £200 for the first year.

If you are thinking about a new car this year, then a purchase before the 1st April will save you this tax and an average saving of £300 on a Mazda2 and £350 on a CX-5 over the first 3 years.

What are the potential impact of VED changes

As April’s changes to VED rates approach, research from cap hpi highlights that there is still lots of confusion and 93% of dealers are convinced the consumer is in the dark and that could lead to some very difficult conversations.

So what are the main changes? From 1 April new tax rates will apply to all new cars; even those producing 1g/km of CO2. Plus, there will be two stages to VED during car ownership.

In the first year, tax will be paid solely on the amount of CO2 emitted. The more CO2, the higher the bill. Cars in the highest band with emissions above 255g/km will pay an eye watering £2,000 upon first registration.

Stage 2 kicks in from year two, or as soon as the car passes to a new owner if this is less than 12 months. At this point the rate, no matter what the car’s CO2 emission, becomes a flat rate of £140 a year for petrol and diesel, or £130 for alternative fuel. Plus, for cars priced over £40,000 there is an extra £310 to pay for five years.

The rules for cars over £40,000 are something to be aware of both now and in the future. Think carefully about delivery dates and warn customers where necessary. Delays to delivery of cars expected in March that spill over to April could mean that the owner incurs the new rates of VED. It’s also worth reviewing demonstrator fleet (including cars such as bodyshop and courtesy cars) to see if decisions on de-fleeting should be brought forward.

In time dealers will be selling used cars taxed under the new regime. A car that cost £40,000+ when new, and three years later sells for £25,000 will still be liable for the £310 supplement and unless the dealer makes clear, is likely to come as a shock to the consumer.

One final point to remember is that VED rates isn’t the same as the P11D. New VED rates will be based on the manufacturer’s list price PLUS any factory fitted options not the actual price paid for the vehicle.

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