There has been much discussion and promotion of changes to vehicle excise duty (VED), but what do these changes mean for new and existing car owners?
The revisions to the vehicle excise duty (VED), which came into force on 1st April, apply to all vehicles registered on or after that date. These changes are expected to have a noticeable impact on how buyers shop for a new vehicle. According to an industry survey, 93 per cent of respondents said they believe that their customers are unaware of the changes.
To ensure that you understand the new VED changes and can effectively explain how they will affect prospective customers, review the following key changes:
- The first-year rate will be based upon official carbon dioxide (CO2) figures and range from £0 to £2,000.
- After the first year, a standard rate of £140 will apply to all petrol or diesel cars, £130 for alternative fuel (hybrids, bioethanol and liquefied petroleum gas - LPG) cars and £0 for cars with no CO2 emissions.
- An extra charge of £310 a year will apply to cars with a list price over £40,000 for the first five years.
- Cars first registered before 1st April 2017 will continue to pay the car tax under the old system.
As these changes will have a significant impact on prospective new car buyers, your sales staff may want to recommend a low-emission vehicle to help them save money.
It is argued by some that such measures have been put in place to counter a loss in Treasury revenues in the existing tax system, on account of the fact that many new cars are more fuel efficient and less polluting than previous generations of vehicles.
Nonetheless, there are signs that drivers of vehicles with higher levels of emissions are set to be hit further financially, with the announcement that some diesel car drivers could be forced to pay £20 a day to enter into a number of UK cities.
Be aware of such changes when deciding which vehicles to stock - whether new or used - and ensure that your customers understand the implications of their buying decisions when it comes to their ongoing finances.