So everyone loses?
Well not necessarily. Certainly buying a low emission car is no longer going to yield the tax benefits it does today. Let’s look at an example involving buying two quite different new cars:
Firstly, a Suzuki Celerio, a 1 litre city car with low emissions of only 99 mg/km of CO2. Under existing rules, the car is exempt from car tax. From April 2017, it would cost you £100 in year one and £140 thereafter. That’s £1,360 if you kept the car for 10 years.
Now let’s imagine buying a tax band L car such as a Nissan 370 Z. Costing around £28,000 its 3.7 litre engine emits 248 m/km of CO2. While you’ll still pay more than you would with the Celerio, you’ll pay considerably less than under existing rules.
Under current rules you’d pay £870 in year one and £490 each year afterwards. Under the new regime in April you’d pay a much larger £1700 in year one, but then only £140 each year afterwards. That means if you buy a new Nissan in April 2017 you’d pay £ 2,960 car tax over 10 years as opposed to £5,280 if you brought one today.
If you’re thinking about buying a new car today you might want to think seriously about the car tax implications of your purchase. For a low emission car it probably makes sense to purchase it before the new rates come into effect in April. If your new car is in a higher band, and you’re planning to hold onto it for a while, you’d probably benefit from doing the maths to see if you want to defer the purchase until next April.