The £40k Expensive car tax is the same as not moving the tax boundaries up to account for inflation, fiscal drag is fucking us all over. Even 40k isn't considered a great wage today because of how much we get taxed and the prices of everything being so high.
The Conservatives set this nonsense up and changed the rules to include EVe from 2025. It needs the be fixed urgently. Either increase the threshold with inflation for all cars. Increse the EV threshold to £52k. Go back to emissions based VED. Have VED as a percentage of list price and take away the cliff edge.
Yep, this is all we have been talking about. Apart from the broken NHS and broken UK in general! Things like this will be yet another killer for the UK economy. To build an economy people have to produce AND buy things. Why bother when you are being taxed on enjoyment? And as you rightly surmise, due to recent inflation, £40k is not a "luxury car" amount. It is a pretty bog standard car amount nowadays. Yes the manufacturers have to lower prices but companies are suffering to due to increased costs and wages.. What really irks is that the ECS/luxury car tax is applied retrospectively as well which is just plain annoying. When I buy something I buy with open eyes and am aware of costs going forward, now I am going to have to pay an extra £190/year for an EV bought in 2021. But £600 for 5-6 years on a new EV or ICE? No chance. Shame about that Yaris GR and countless other cars I liked the look of. Renault 5 should sell well though! VED should be based on things like size and weight and efficiency etc as not just cost.
Even worse is that governments frequently change the rules, where we end up with the crazy situation where a 2016 Jaguar F Type 5.0 V8 costs about £760 a year for road tax, but an identical vehicle from 2017 pay £190 per year road tax. It is time the whole road tax system is reviewed and consolidated
The used market would also get a boost. I'd love to buy a Suzuki Across, used ones are just over £21k however I won't because of the luxury car tax. The fuel savings, running on electric for most of my journeys would be wiped out. Utter madness.
Not enough space in comments to express my feelings on this. I bought a used car that was 40k or so new, but used cost 28k. I could have got a hybrid for same money but still was in 'luxury car tax' bracket. So stuff it, I got pure petrol and have fun. Thanks for bringing this up...nothing will change though, too much a cash cow.
100% agree with you but this tax process is standard practice for governments. Introduce a tax that doesn’t effect many at the start then don’t increase the threshold over the years to keep up with inflation with a result of most people now pay the tax, and there we have it another stealth tax festering in the background. 🙄
This situation has stopped me from updating my car recently so I’ll keep running my Mercedes diesel. What the Government could consider is that with the potential for increased sales they would be collecting more in VAT.
The different governments do tend to forget inflation in many things. The annual Christmas bonus for pensioners for instance. £10 Edward Heath brought it in in the 70s. With inflation it should be £120+ but the pensioners still only get £10. I own a Rav4 phev. Always plug in and only put £15 of petrol in every 3 months. Still have to pay £600 for the car tax though.
The cliff edge is nuts, as is the Ferrari owner paying the same VED after the first year as the EV3 driver. Just make it a %age of the list price and be done with it.
A good, well reasoned argument. Sadly I’m not am not convinced that politicians of any persuasion and reason are bedfellows. My favourite politician? Jim Hacker 😜
Surely every car company is doomed as their costs of parts and labour soar and their profit margins shrink. No one can afford 44k for a Vauxhall Astra. Perhaps they should just go back to making standard ICE vehicles?
It’s the fact that tax lasts 6 years! So even if buying a 3/4 year old one which has lost all of its value you will still incur it which is massively off putting. I could cope with it if it was for 3 years. You could then pick up a three year old previous lease for a good price and not have the added tax. I think it’s the death of the EV. there just isn’t an incentive now. I’m currently looking at 2019 diesels and planning on running my older car for longer than I ever used to. The golden era of low interest rate PCP’s on new and used cars has gone and I suspect some manufacturers will go with it.
I think the person buying 45k car is annoyed by the tax but can pay it. Three years down the road that same tax on a 20k car looks expensive compared to on a year older which will affect resale values and in turn PCP will get more expensive as finance companies will have to drop minimum values and first users have to pay more depreciation
These tax bands are insane and bringing this in for EVs will be the kiss of death. Still used car trade should prosper. In France they killed off any cars over 2 litres with tax so as consumers just boycott any cars that hit the £40,000 mark, things would change if only consumers voted with their feet I apply this on many items . I’m just not going to be ripped off especially as a pensioner.
The low historic inflation rate (until recently) has resulted in many irrational cliff edges in UK tax law and benefits. Countries who’ve traditionally had higher inflation rates know you can’t just set a hard £ amount and leave it unchanged each year for a decade.
How does it work with a model of car that cost under £40k in 2018 but later exceeded that by 2021. Would identical spec cars of different ages be treated differently because of different original sale prices. That's a lot of historic price data required to assess a tax.
Whilst I 100% agree with Tim the cliff edge luxury car tax is nothing compared the the cliff edges on other tax allowances about child benefits, pensions, higher earnings etc. All these make £410 a year car tax insignificant. (Though I assume Tim is set up as a private company and pays himself differently to a PAYE person so won’t realise this!)
Your dead right, but the government aint going to increase the level at which the tax starts any time soon , if at all. Ev3 gt line plus a colour other than the crap standard orange colour takes it over 40k. All the incentives have been removed for potential ev owners now.
You could get the Air version. More honest looking to my eyes, none of this gloss plastic cladding and you get cloth seats, not faux leather-this used to be called vinyl back in the day😅 I apreciate some might want some of the extras GT Line brings but I don't feel it's worth £3.5k more over Air trim.
Bait and switch. Classic tactic. Same will happen with electricity tax. Currently 5%. Wait til it goes to parity with petrol (80ish%). Now where's the cheap fuel? Net zero will be achieved by taxing people completely out of cars!
What you want and what you can afford are two different things. There are cars out there for all buyers which are cheaper however people still want a car with the right badge. I do agree with you but I just feel there are still many badge snobs out there.
Bob on Tim, we leased an EV for 7yrs, hybrid for 7yrs prior that, replacing April and going for a sub 40k hybrid petrol next as tax puts me off as does the range loss through life of the EV, about 20% in our Kona E over 3yrs and 30% in winter 🤷♂️ really like the CH-R GR to get the awd but tips over the 40k so going for a Nissan Juke hybrid instead
Just cars? From here it seems the UK has so much dumb it's hard to see the trees through the forest of stupid rules. You lot need to start paying more attention to who you're voting for.
The government only uprate things for inflation when it suits them the winter fuel allowance wasn’t updated the benefits £10 Xmas bonus has stayed the same since the great flood I think mps salaries haven’t been left the same for 25/30 years the £10 Xmas bonus has been the same for 52 years
Was recently looking for a car, used in my case but looking round showrooms at what i consider ordinary cars, by that I mean not premium or luxury, and amazed that they were incurring the 'Luxury Car Tax'. OK if you are buying a Beemer?Merc/Audi etc, but Renault? It is another stealth tax and how long will it be before no family sized car is under that £40k limit?
100% I am currently looking to get a new car as I'm starting a family and need a bigger vehicle. Yet I am finding it hard to find a decent family SUV with all the bells and whistles for under £40K. I don't even need a brand new one.... would happily pick up a 2023 model of a car which had a MSRp of 40-45 and now can be purchased for sub 30.... but it's that stupid tax which is putting me off.
yet another tax that britian can add on those that are doing ok for them self. seems that doing well and making money is more of a crime in this country than the real crimes... when a rubbish cross cost's 30k how many cars actually pass under this threshhold. Adding it to EV's is even more stupid. we had looked at buying an EV this year but with this coming it makes any little saving we would have made on fuel nearly zero, 8k a year the saving was already not huge, then factor in the huge depreciation with Ev's and it kills it.
Dear Tim, I knew this wasn't going to go well, I blame the new jacket, bring back the tartan horror ! But seriously, this was always going to happen due to the amount of tax revenue raised by ICE vehicels, EVs got away with it for longer than I imagined before getting caught in the net. You are correct, increase the £40k by inflation and the motor makers will up the price to match. My guess is that in the UK and EU, the only car plants that will survive are those that make very, very expensive models + £100k and everyone else will eek the most life out of older ICE cars or buy Chinese.
Stealth tax because you can afford more than 40k for a car is just wrong. It should be based on CO2! Even a top of the range Mini EV will get clobbered. Sorry but a stealth tax is just wrong and people who earn more already pay more PAYE in the first place not to mention all of the other money they spend. We all use the roads so we should all pay the same and the only difference should be based on CO2 on the environment.
Best solution - get rid of this government. Never thought I'd say that on a car review channel but we need a government with some common sense. Tim for PM?
They are freezing tax thresholds all over the shop. Not just in motoring. More money to the treasury. I don't see anything happening soon. Call me a cynic.
Do not buy a vehicle that doesn't fall into the category.. They will slowly but surely sell nothing and they won't get any of this special tax.. It's a Mexican standoff.. Of course the real plan is that cars won't be affordable and we won't have one.. Then no-one will go to work because the public transport is already not fit for purpose... Then no-one works, they get no tax.. No-one will start a family, they will have no money to buy anything and they will get even less tax as the whole economy and industry starts to shut down.. Or they introduce bunk beds for workers who live where they work nd their work place is their home.. And then do the people rise up? Or do they act like sheep and see it as a permanent lockdown at their workplace? Or what?
A couple of points.... I bought an M135i im 2021. I specced it to be £15 under £40k. To buy the same car with the same spec is £49k. £50 to £52k would be more sensible. Point 2. In July I bought a 6 year old 911. Price to tax - £190! So there are winners and losers when you compare it to the pre-2017 scheme when it was based on emissions.
Two things at least wrong with your oremuse, 1) bmw m5, anyone buying that Krout carpet should be taxed £40k on top and made to burn the car after two days of ownership, plus the car can't be driven in those 2 days 2) all taxation us government theft
The £40k Expensive car tax is the same as not moving the tax boundaries up to account for inflation, fiscal drag is fucking us all over. Even 40k isn't considered a great wage today because of how much we get taxed and the prices of everything being so high.
The Conservatives set this nonsense up and changed the rules to include EVe from 2025. It needs the be fixed urgently.
Either
increase the threshold with inflation for all cars.
Increse the EV threshold to £52k.
Go back to emissions based VED.
Have VED as a percentage of list price and take away the cliff edge.
None of those - just have a simple flat rate
Someone's bought a +40k EV 😂
With ploicies like that, you're my favourite politician, Tim ❤
Yep, this is all we have been talking about. Apart from the broken NHS and broken UK in general! Things like this will be yet another killer for the UK economy. To build an economy people have to produce AND buy things. Why bother when you are being taxed on enjoyment? And as you rightly surmise, due to recent inflation, £40k is not a "luxury car" amount. It is a pretty bog standard car amount nowadays. Yes the manufacturers have to lower prices but companies are suffering to due to increased costs and wages.. What really irks is that the ECS/luxury car tax is applied retrospectively as well which is just plain annoying. When I buy something I buy with open eyes and am aware of costs going forward, now I am going to have to pay an extra £190/year for an EV bought in 2021. But £600 for 5-6 years on a new EV or ICE? No chance. Shame about that Yaris GR and countless other cars I liked the look of. Renault 5 should sell well though! VED should be based on things like size and weight and efficiency etc as not just cost.
Even worse is that governments frequently change the rules, where we end up with the crazy situation where a 2016 Jaguar F Type 5.0 V8 costs about £760 a year for road tax, but an identical vehicle from 2017 pay £190 per year road tax. It is time the whole road tax system is reviewed and consolidated
The used market would also get a boost. I'd love to buy a Suzuki Across, used ones are just over £21k however I won't because of the luxury car tax. The fuel savings, running on electric for most of my journeys would be wiped out. Utter madness.
Not enough space in comments to express my feelings on this. I bought a used car that was 40k or so new, but used cost 28k. I could have got a hybrid for same money but still was in 'luxury car tax' bracket. So stuff it, I got pure petrol and have fun. Thanks for bringing this up...nothing will change though, too much a cash cow.
100% agree with you but this tax process is standard practice for governments. Introduce a tax that doesn’t effect many at the start then don’t increase the threshold over the years to keep up with inflation with a result of most people now pay the tax, and there we have it another stealth tax festering in the background. 🙄
This situation has stopped me from updating my car recently so I’ll keep running my Mercedes diesel. What the Government could consider is that with the potential for increased sales they would be collecting more in VAT.
It's not the only tax or law that's broken, but that's another story........
The different governments do tend to forget inflation in many things. The annual Christmas bonus for pensioners for instance. £10 Edward Heath brought it in in the 70s. With inflation it should be £120+ but the pensioners still only get £10. I own a Rav4 phev. Always plug in and only put £15 of petrol in every 3 months. Still have to pay £600 for the car tax though.
You described me perfectly in the first 20 seconds
The cliff edge is nuts, as is the Ferrari owner paying the same VED after the first year as the EV3 driver. Just make it a %age of the list price and be done with it.
It's mental! I'm so relieved my 2021 mondeo was under that bracket
Well said👍
A good, well reasoned argument.
Sadly I’m not am not convinced that politicians of any persuasion and reason are bedfellows.
My favourite politician?
Jim Hacker 😜
Surely every car company is doomed as their costs of parts and labour soar and their profit margins shrink. No one can afford 44k for a Vauxhall Astra. Perhaps they should just go back to making standard ICE vehicles?
I agree Tim. You’re the BOSS :)
It's not so much the £40k it's the fact that it's a cliff edge. A more graduated scheme would be fairer for all
It’s the fact that tax lasts 6 years! So even if buying a 3/4 year old one which has lost all of its value you will still incur it which is massively off putting. I could cope with it if it was for 3 years. You could then pick up a three year old previous lease for a good price and not have the added tax.
I think it’s the death of the EV. there just isn’t an incentive now. I’m currently looking at 2019 diesels and planning on running my older car for longer than I ever used to. The golden era of low interest rate PCP’s on new and used cars has gone and I suspect some manufacturers will go with it.
I think the person buying 45k car is annoyed by the tax but can pay it. Three years down the road that same tax on a 20k car looks expensive compared to on a year older which will affect resale values and in turn PCP will get more expensive as finance companies will have to drop minimum values and first users have to pay more depreciation
What about - additionally - the rises that are coming in 'first registration fees' from April 2025 on top of the luxury car tax???
These tax bands are insane and bringing this in for EVs will be the kiss of death. Still used car trade should prosper. In France they killed off any cars over 2 litres with tax so as consumers just boycott any cars that hit the £40,000 mark, things would change if only consumers voted with their feet I apply this on many items . I’m just not going to be ripped off especially as a pensioner.
The low historic inflation rate (until recently) has resulted in many irrational cliff edges in UK tax law and benefits. Countries who’ve traditionally had higher inflation rates know you can’t just set a hard £ amount and leave it unchanged each year for a decade.
How does it work with a model of car that cost under £40k in 2018 but later exceeded that by 2021. Would identical spec cars of different ages be treated differently because of different original sale prices. That's a lot of historic price data required to assess a tax.
Whilst I 100% agree with Tim the cliff edge luxury car tax is nothing compared the the cliff edges on other tax allowances about child benefits, pensions, higher earnings etc. All these make £410 a year car tax insignificant. (Though I assume Tim is set up as a private company and pays himself differently to a PAYE person so won’t realise this!)
It’s a stop gap until they can bring in pay per mile as otherwise if everyone had an EV there would be no money to maintain the roads!
Your dead right, but the government aint going to increase the level at which the tax starts any time soon , if at all. Ev3 gt line plus a colour other than the crap standard orange colour takes it over 40k. All the incentives have been removed for potential ev owners now.
You could get the Air version. More honest looking to my eyes, none of this gloss plastic cladding and you get cloth seats, not faux leather-this used to be called vinyl back in the day😅 I apreciate some might want some of the extras GT Line brings but I don't feel it's worth £3.5k more over Air trim.
Bait and switch.
Classic tactic.
Same will happen with electricity tax. Currently 5%. Wait til it goes to parity with petrol (80ish%). Now where's the cheap fuel?
Net zero will be achieved by taxing people completely out of cars!
What you want and what you can afford are two different things. There are cars out there for all buyers which are cheaper however people still want a car with the right badge. I do agree with you but I just feel there are still many badge snobs out there.
Bob on Tim, we leased an EV for 7yrs, hybrid for 7yrs prior that, replacing April and going for a sub 40k hybrid petrol next as tax puts me off as does the range loss through life of the EV, about 20% in our Kona E over 3yrs and 30% in winter 🤷♂️ really like the CH-R GR to get the awd but tips over the 40k so going for a Nissan Juke hybrid instead
Just cars? From here it seems the UK has so much dumb it's hard to see the trees through the forest of stupid rules. You lot need to start paying more attention to who you're voting for.
The government only uprate things for inflation when it suits them the winter fuel allowance wasn’t updated the benefits £10 Xmas bonus has stayed the same since the great flood I think mps salaries haven’t been left the same for 25/30 years the £10 Xmas bonus has been the same for 52 years
Was recently looking for a car, used in my case but looking round showrooms at what i consider ordinary cars, by that I mean not premium or luxury, and amazed that they were incurring the 'Luxury Car Tax'. OK if you are buying a Beemer?Merc/Audi etc, but Renault? It is another stealth tax and how long will it be before no family sized car is under that £40k limit?
100% I am currently looking to get a new car as I'm starting a family and need a bigger vehicle. Yet I am finding it hard to find a decent family SUV with all the bells and whistles for under £40K. I don't even need a brand new one.... would happily pick up a 2023 model of a car which had a MSRp of 40-45 and now can be purchased for sub 30.... but it's that stupid tax which is putting me off.
yet another tax that britian can add on those that are doing ok for them self. seems that doing well and making money is more of a crime in this country than the real crimes... when a rubbish cross cost's 30k how many cars actually pass under this threshhold. Adding it to EV's is even more stupid. we had looked at buying an EV this year but with this coming it makes any little saving we would have made on fuel nearly zero, 8k a year the saving was already not huge, then factor in the huge depreciation with Ev's and it kills it.
Dear Tim, I knew this wasn't going to go well, I blame the new jacket, bring back the tartan horror ! But seriously, this was always going to happen due to the amount of tax revenue raised by ICE vehicels, EVs got away with it for longer than I imagined before getting caught in the net. You are correct, increase the £40k by inflation and the motor makers will up the price to match. My guess is that in the UK and EU, the only car plants that will survive are those that make very, very expensive models + £100k and everyone else will eek the most life out of older ICE cars or buy Chinese.
Stealth tax because you can afford more than 40k for a car is just wrong. It should be based on CO2! Even a top of the range Mini EV will get clobbered. Sorry but a stealth tax is just wrong and people who earn more already pay more PAYE in the first place not to mention all of the other money they spend. We all use the roads so we should all pay the same and the only difference should be based on CO2 on the environment.
Best solution - get rid of this government. Never thought I'd say that on a car review channel but we need a government with some common sense. Tim for PM?
I'd ban cars and make everyone ride Yamaha R1s...
@@TimRodieDrivesStuff 🤣
Remember this hike was put in place by the Tories, be careful what you wish for.
The conservatives introduced this tax....
@@matthewtyler-jones8317 Wasn't a fan of the last lot either. As I said, let's get a government with some common sense.
Title cards on this vid are 💯
Hi algorithy
I agree with Tim
They are freezing tax thresholds all over the shop. Not just in motoring. More money to the treasury. I don't see anything happening soon. Call me a cynic.
Totally agree
Do not buy a vehicle that doesn't fall into the category.. They will slowly but surely sell nothing and they won't get any of this special tax.. It's a Mexican standoff..
Of course the real plan is that cars won't be affordable and we won't have one..
Then no-one will go to work because the public transport is already not fit for purpose...
Then no-one works, they get no tax..
No-one will start a family, they will have no money to buy anything and they will get even less tax as the whole economy and industry starts to shut down..
Or they introduce bunk beds for workers who live where they work nd their work place is their home..
And then do the people rise up?
Or do they act like sheep and see it as a permanent lockdown at their workplace?
Or what?
A couple of points....
I bought an M135i im 2021. I specced it to be £15 under £40k. To buy the same car with the same spec is £49k. £50 to £52k would be more sensible.
Point 2. In July I bought a 6 year old 911. Price to tax - £190! So there are winners and losers when you compare it to the pre-2017 scheme when it was based on emissions.
Two things at least wrong with your oremuse, 1) bmw m5, anyone buying that Krout carpet should be taxed £40k on top and made to burn the car after two days of ownership, plus the car can't be driven in those 2 days
2) all taxation us government theft
That's just rubbish!😁
Why do most ev's look more appealing and stylish than most ice vehicles ever did?
Because they are!
@@matthewtyler-jones8317 Smart answer
No they don't!
but that's just my opinion, obviously!
At least EV owners will finally be paying for all the damage their stupid heavy cars do to the roads