Luxury car tax on cars over £40,000

Car_54

Goudy said:

sheslookinhot said:

Mr.Generous said:

rsvtoddy said:

What Car is right and the dealer is wrong!

He is correct. 6 years of at least £620 

The luxury car tax is payable for 5 years. (years 2-6). The first year is paid at standard rate.

Then for year two a standard rate is paid (currently £195) but cars with a list price over £40,000 will pay an extra £425  (£425+£195= £620) a year for year two, three, four, five and six. (you pay up front for each year)

The "currently" caveat also applies to the £425. What is the likelihood of that being unchanged over the period?

Goudy

Car_54 said:

Goudy said:

sheslookinhot said:

Mr.Generous said:

rsvtoddy said:

What Car is right and the dealer is wrong!

He is correct. 6 years of at least £620 

The luxury car tax is payable for 5 years. (years 2-6). The first year is paid at standard rate.

Then for year two a standard rate is paid (currently £195) but cars with a list price over £40,000 will pay an extra £425  (£425+£195= £620) a year for year two, three, four, five and six. (you pay up front for each year)

The "currently" caveat also applies to the £425. What is the likelihood of that being unchanged over the period?

Indeed and who says the £40k trigger will stay the same.
The government could up the £425 and/or drop the £40k trigger lower.

Plus cars are generally getting more expensive so they'll capture more that way.
There are just as many VW Golf models over £40k than there are under £40k and that's without any options. (£42k+ for a GTE with cloth seats, luxury or what)

They'll certainly increase the £195 year on year though, someone has to fill that hole left because of the welfare reform u-turn.

Mr.Generous

Some good points made, a sneaky tax generator for Rach in October, a super luxury tax band for vehicles over £60k price new at an extra £850 say, very popular as everyone would think Toff's can afford it, but probably a shock how many models drop into that band, and if they freeze it after a few years lots of mainstream models start to fall into the bracket. 

Herzlos

There don't seem to be any normal cars that creep over the £60k band. There are probably some 5-series's you can spec over £60k but it's mostly 7 series, M or Alpinas. 

Given another 10 years of inflation you could be right though. 

I'm not sure exactly exactly how wealthy you'd need to be to buy a £60k car, but a quick calculator with £10k down, 5 year term and excellent credit puts it at £962/month before running it. 

I assume you'd need to be comfortably within the top 10% to even stand a chance. Though to be fair I don't know how so many people can justify buying a £40k car either.

Mildly_Miffed

Mr.Generous said:

Some good points made, a sneaky tax generator for Rach in October

Let's take the party politics out of this one...

It was introduced in 2017 by the Conservatives with a £40k cap.

At the change of governing party in the 2024 election, the £40k cap would have needed to have risen to £51,800 to keep pace with inflation.

There has been just one budget since.
The original £40k cap's real-terms equivalent now would be £53,500.
£40k last year would be £41.3k now...

Grumpy_chap

Mr.Generous said:
a super luxury tax band for vehicles over £60k price new at an extra £850 say, very popular as everyone would think Toff's can afford it

Which is pretty much what people said when the £40k threshold was introduced.
Yet here we are with nice but normal family cars suffering the tax.  My BiL's Skoda is even within scope.