Road tax confusion looming

  • Changes due in April
  • Hits many 'ordinary' cars
  • Affects used-car values
Used car owners could be in for a nasty shock when their road tax is due, because there will be a sharp rise in charges next April.

During the budget in March, Chancellor Alistair Darling announced a drastic overhaul of the UK's road tax charges.

However, after some confusion, the Government has clarified that it now intends to apply the new charges to cars registered between March 2001 and March 2006.

This means that cars of that age emitting 226g/km or more of carbon dioxide will have to pay £400 a year in road tax.

As well as hitting those who drive opulent cars or large 4x4s, it will also hit the average car owner in some instances, because many of the models affected are popular cars.

Models such as the Ford Mondeo 2.5 V6, Rover 75 2.0 V6 and Subaru Impreza 2.0 GX and WRX all fall into this new category.

Values now expected to tumble
In addition to the rising cost of fuel, maintenance, and insurance, cars that fall into the £440 tax band are now expected to significantly drop in value when these rules come into effect.

The average price of a used car in the UK is roughly £6000 at the moment, but car valuation experts Vehicle Information Publishing believe affected cars will immediately drop in value by roughly 10%, and continue to depreciate steeply afterwards.

Older, less-efficient cars worth only a few thousand pounds will be the hardest hit, so much so that owners might then not be able to afford to change their car.

This situation also promises to confuse both owners and buyers, because a car registered before the cut-off date will be charged under the old rules, while a car registered just a day later will get hit by the penalty.

Alan Senior from VIP, believes many people will be caught out. 'The only time owners may find out about the £400 road tax bill is when the reminder lands on the doormat'

What to do if this affects you
Before you buy that cheap used car, check its details carefully.

The date of registration will have a massive effect on the cost of road tax.

Choose the wrong car and you'll be automatically £230 worse off a year, and your car will depreciate a lot faster, too.

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