Boom in early 2017 new car sales predicted

A boom in car sales is on the cards for early 2017 if buyers are to beat new car tax rules that will raise the cost of owning some of Britain’s most popular models from April.

Retailers are already reporting that buyers are changing their cars early to ensure they are delivered and on the road before 1 April this year, to ensure they are taxed under the current regime until they are scrapped.

Meanwhile, a survey of 1,000 motorists conducted by BuyACar, which asked when they were planning to buy their next car, found that the number saying it was in the next three months had doubled compared to the previous survey six months ago.

“Anyone buying a car after April next year could be in for a shock,” BuyACar’s MD Austin Collins said. “The waiting list for some popular cars is close to 16 weeks, so time is really running out to order a new car in time to avoid the tax changes.”

Dozens of models that are currently exempt will start to attract £400 in tax charges over three years, when the new Treasury scheme comes into place, affecting any new car registered after that date. In the most extreme cases, some buyers who choose a car which is currently tax exempt will be charged almost £1,000 over three years.

The current tax scheme is based on carbon dioxide emissions. Any car emitting an average of less than 99g of CO2 for every kilometre that it drives is currently exempt from car tax. The new rules slash that exemption which, after 1 April, will only apply to vehicles with no CO2 emissions at all – mainly electric cars. Drivers of any other car will pay £140 in tax each year, apart from the first year that it’s on the road, when tax will still be calculated on CO2 emissions.

It gets worse for anyone buying a car with an official price of more than £40,000. They will face an annual ‘wealth tax’ for cars between the ages of one and six years, taking their bill to £450 a year.

The changes are expected to earn the Treasury more than a billion pounds a year from 2020. Car tax revenues had been decreasing, as more fuel-efficient cars came onto the market. The Treasury finally stepped in when one in five new cars sold in 2015 was efficient enough to be tax exempt, according to the Society of Motor Manufacturers & Traders.