SMALL businesses hardly need reminding that the cost of business car motoring is rising: the price of fuel is increasing; the company car tax bands tighten in the new tax year; and also from April the cost of a tax disc changes – especially for new cars.
Vehicle Excise Duty – or road tax – will see a special one-off cost applied, a so-called ‘showroom tax’. In some cases, this could add an additional £950 to the cost of the car.
The government’s intention is to alter car buying attitudes by pushing them towards lower emission vehicles through taxation – in the same way it has with company car taxation.
The highest banding is currently a ‘Band M’ vehicle. A Range Rover 3.6 TDV8 Vogue 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.
Conversely, choosing a low emission car – the lowest is band A – could result in no VED charge at all. For example, the Toyota iQ would qualify for L0 VED.
“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 leasing 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 motivated by different reasons including status and brand considerations,” Forsythe added.
Further information
Go to the DirectGov website for more information and look under Changes to vehicles tax from April 2010.
If you want to know more about the emissions of a particular car, then use the VCA web site: www.vcacarfueldata.org.uk
Changes to vehicle tax from April 2010
| VED band | CO2 (g/km) | 2010 first-year rate | Registered vehicles |
|---|---|---|---|
| A | Up to 100 | £0 | £0 |
| B | 101 -110 | £0 | £20 |
| C | 111 -120 | £0 | £30 |
| D | 121 -130 | £0 | £90 |
| E | 131 -140 | £110.00 | £110 |
| F | 141 -150 | £125.00 | £125 |
| G | 151 -165 | £155.00 | £155 |
| H | 166 -175 | £250.00 | £180 |
| I | 176 – 185 | £300.00 | £200 |
| J | 186 – 200 | £425.00 | £235 |
| K | 201- 225 | £550.00 | £245 |
| L | 226 – 255 | £750.00 | £425 |
| M | Over 255 | £950.00 | £435 |
