Vehicle tax changes will push up price of new vehicles, says Ralph Morton
Chauffeur and executive car hire firms are facing more than just rising fuel prices at the moment. Running costs increase further this April with a rise in Vehicle Excise Duty - or road tax - with the introduction of a so-called “showroom tax”.
The government’s intention is to alter public and fleet and buying attitudes by pushing them towards lower emission vehicles through taxation. However, that leaves chauffeurs and executive car hire firms exposed to increasing costs because such firms usually operate with higher emission cars.
Here’s what is happening to the VED rates. Currently a Band M vehicle - any Range Rover, the Mercedes S500L or the new Jaguar XJ 5.0 V8 LWB, for example - would attract £405 on registration, but the first year rate from April will more than double to £950. Also in the second year, although the rate drops, at £435 it will still be £30 higher than current bandings.
There are significant savings to be made by choosing your next chauffeur or executive hire car more carefully. For example, both the new Jaguar XJ 3.0 V6 LWB (184g/km) and the Mercedes E350 CDI Avantgarde (181g/km) fall into Band I (176-185g/km) with an additional first year payment of £300 - a significant saving on the £950 for Band M - followed by £200 annually. A sub-120g/km car, such as Volvo’s new S80 DRIVe, would incur no VED in year one, and just £30 a year thereafter.
“It is the government's stated intention to use motoring and related taxes to influence driver choice towards lower emitting vehicles. The changes to Vehicle Excise Duty are the latest measure, with the introduction of an incentive/penalty payable upon vehicle registration,” commented Clive Forsythe from contract hire and fleet management company Masterlease.
“The reality of the situation is that we have already witnessed a shift toward lower CO2 vehicles and improvements in engine technology mean that vehicles that perhaps would have been in the higher bandings are no longer classified as such. However, there will always be an executive demand for larger vehicles - such as chauffeurs - who are motivated by different reasons including status and brand considerations,” Forsythe added.
While the UK’s private and fleet drivers can access lower emission vehicles more readily than vehicles that would be fit for purpose for a chauffeur or executive car hire driver, nevertheless the changes are real and need to be addressed.
But by some intelligent buying, these VED rate rises can be minimised - and with better fuel consumption, the running costs will improve, too.
Further information
Go to the DirectGov website for more information and look under Changes to vehicles tax from April 2010. Web address: http://www.direct.gov.uk/en/Motoring/OwningAVehicle/HowToTaxYourVehicle/DG_172916
If you want to know more about the emissions of a particular car, then use the VCA web site: http://www.vcacarfueldata.org.uk/
Changes to vehicle tax from April 2010
| |
Petrol/Diesel fuelled vehicles | Alternatively fuelled vehicles |
| Band | CO2 (g/km) | 2010 first-year | Registered vehicles | 2010 first-year | Registered vehicles |
| A | Up to 100 | £0 | £0 | £0 | £0 |
| B | 101-110 | £0 | £20 | £0 | £10 |
| C | 111-120 | £0 | £30 | £0 | £20 |
| D | 121-130 | £0 | £90 | £0 | £80 |
| E | 131-140 | £120 | £110 | £100 | £110 |
| F | 141-150 | £125 | £125 | £115 | £115 |
| G | 151-165 | £155 | £155 | £145 | £145 |
| H | 166-175 | £250 | £180 | £240 | £170 |
| I | 176-185 | £300 | £200 | £290 | £190 |
| J | 186-200 | £425 | £235 | £415 | £225 |
| K | 201-225 | £550 | £245 | £540 | £235 |
| L | 226-255 | £750 | £425 | £740 | £415 |
| M | Over 255 | £950 | £435 | £940 | £425 |
