Sales of new cars plummet as vehicle tax increase comes into force

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I'm with DrNick and have been for a long time. Duty on fuel is very hard to avoid so gets paid by everyone. The more you drive and the more luxurious your car, the more you pay. AND as a total bonus, VED dodgers disappear and so does the cost of administering VED! Everyone wins (except the scumbags who didn't pay their road tax).
 
All these arguments above point to the only real solution (given that the problem is pollution)
Get rid of VED or RFL and put an extra flat rate on fuel.
People can then have big engine cars for low mileage and pay the same in pollution tax as small engine cars doing thousands of miles.

But that would not be fair on people who live in rural areas (me for example!) and would put up the cost of everything, as it all arrived via lorry and van.
 
You don't 'lose' the VAT.

The tax has some effect on used prices by keeping them a bit higher. If VAT was removed from new cars then used prices would be a bit lower. Similarly if it was increased then used price would be higher.

So it's really just depreciation from the total price paid.

But essentially 20% of the price you've just paid off the forecourt is VAT. If you bought a car brand new, drove home and then decided to sell it back to the dealership the next day, it would be a shock.

A £40,000 car is really a £32,000 car plus tax. So as I'd understand it, the deprecation starts minus the VAT thats been paid.
 
Well sort of- after 25 years it was free.

They stopped it then , after loads of complaints its being reinstated , but only after 40 years old.

Sorry, the way I read your post made it sound like they were dropping it again. :thumb:
 
A £40,000 car is really a £32,000 car plus tax. So as I'd understand it, the deprecation starts minus the VAT thats been paid.

It doesn't. Used prices are based upon what people will pay. There are a number of aspects: new price, risk, finance offers, demand vs supply, fashion, desirability, warranty. But you don't simply lose the tax/VAT.

Look at countries with very very high tax on cars. Used prices are astronomical too.

In the UK we have very aggressive offers on new vehicles. That tends to mean the new cars a are a bit more attractive relative to younger used cars - and also creates a supply of used cars as a proportion of these cars are fed back into the used market. So we have quite a steep depreciation curve.
 
Governments need the tax no matter what we drive.

At the end of the day it is all about the money. They didnt think that the Electric/ hybrid would take of as quickly as it did. Now they having to quickly change the goal posts and revise the laws. So If we lived in a perfect utopia where there were no cars only buses and trains, they will not be cheap to use.
If the prevailing 7/8% of Taxation raised is the amount raised by road tax, fuel tax and VAT £45/£55 BILLION is raised, that roughly equates to £14200 to the number of cars on the road in 2016. It is always about the money:mad:
 
I just popped in to the local Mercedes dealership and they told me that orders are up for April in comparison to last year and they are already up in the first few days of May. I'm not sure if they are just feeding me a line on that one
 
It doesn't. Used prices are based upon what people will pay. There are a number of aspects: new price, risk, finance offers, demand vs supply, fashion, desirability, warranty. But you don't simply lose the tax/VAT.

The VAT wings it's way off to the government regardless as to whether your own a car which retains enough value to negate that though.

You pay £20k, £4k goes in VAT and £16k to the dealership. If you're lucky, you've bought a car which has enough demand that if you suddenly had to sell, you may not end up 20% down on the deal but the likelihood is that if you then decided to part exchange it, you'll lose more than that!

I'm not disagreeing that the market impacts on a cars value. I mean look at the Focus RS or M2 which sell for more than book price because of their scarcity/demand.

My original point was that it's ironic that people's new car buying is impacted by tax which is a hundred quid here or there a year. Yet people are happy to buy a brand new car which whether I look at it as VAT lost or depreciation, either way is a huge chunk of cash. :dk:
 
My original point was that it's ironic that people's new car buying is impacted by tax which is a hundred quid here or there a year. Yet people are happy to buy a brand new car which whether I look at it as VAT lost or depreciation, either way is a huge chunk of cash. :dk:

Indeed.

They worry about annual VED and fuel economy when depreciation is the dominant cost - depending on the car and mileage possibly 90%.
 
Indeed.

They worry about annual VED and fuel economy when depreciation is the dominant cost - depending on the car and mileage possibly 90%.

Exactly. I was chatting to someone about a car they're getting on PCP. I said about how my CLS is expensive to fix IF something goes wrong but essentially deprecation is minimal.

This person goes, "that's why I buy new so there aren't costs like that". Apart form the £200 a month on something you will hand back afterwards. Most odd. :wallbash:
 
You pay £20k, £4k goes in VAT and £16k to the dealership. If you're lucky, you've bought a car which has enough demand that if you suddenly had to sell, you may not end up 20% down on the deal but the likelihood is that if you then decided to part exchange it, you'll lose more than that!

A lot of people use the phrase about losing the VAT when driving off the forecout but it's absolutely nothing to do with the VAT itself. Cars are priced VAT inclusive and the VAT stays with the car for its whole life. Your maths is a bit out by the way - on a £20K inc VAT car it would be £16,666 net and £3,333 VAT! :)

Not likely to happen at the £20K level, but if it was a model that was in high demand then it could be worth more than you paid for it.
 
nick mercedes said:
But that would not be fair on people who live in rural areas (me for example!) and would put up the cost of everything, as it all arrived via lorry and van.

Since neither you nor the transport companies will be paying VED anymore, it will reduce your running costs. Also, since the government will definitely get the extra fuel tax AND won't have to pay an entire department to administer and enforce VED, it probably will not cost you anything.
 
Since neither you nor the transport companies will be paying VED anymore, it will reduce your running costs.

I wish, VED on the school run car is £12 a month, school run is 60 miles a day, and plenty of people do double that.
 
This person goes, "that's why I buy new so there aren't costs like that". Apart form the £200 a month on something you will hand back afterwards. Most odd. :wallbash:

This made me laugh, thanks! This does seem to be the prevailing opinion from many. I guess people like not having to think about their car and prefer to pay a predictable monthly sum in return for a better chance that nothing breaks. In my view, this makes for a dull life and I prefer taking my chances with a more interesting older car. Chances are they repair costs will always be well below the depreciation on buying a similar car from new.
 

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