SNEAKING UP
Car buyers facing ‘stealth tax’ that turns regular motors into ‘luxury cars’ & adds extra £410 charge
Including the loophole that means you don't have to pay
DRIVERS are facing a £410 "stealth tax" that turns their mainstream motors into "luxury" vehicles.
Inflation has resulted in almost half of all cars being dragged into the premium bracket, leading to extra charges for owners.
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Introduced in 2017, the Expensive Car Supplement (ECS) requires owners of "luxury" cars to pay more road tax.
When it first came in, the majority of vehicles on UK roads sat well below the £40,000 threshold.
However, according to Auto Trader, the average price of a new car was £39,308 as of last year - up around £12,000 from five years before.
Despite the significant increase in car prices, the threshold has remained frozen and doesn't look set to change.
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If it was adjusted for inflation, the threshold would sit at £51,000 today.
As such, the platform estimates that around 45% of new petrol and diesel models and 67% of new EVs surpass the £40,000 barrier.
In practice, this means thousands of what were previously considered standard models being swept into the upper tax rate.
Owners of cars subject to the ECS have to pay £410 on top of their normal road tax for each of the first five years of registration.
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The exact amount paid in total depends on when you car was registered, but for those from after 2017 will see a petrol or diesel motor cost £600 a year.
If your car is registered before 2017, the amount changes based on emissions but, as an example, something like a standard Ford Focus would total around £630.
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And that's not a particularly unrealistic scenario, as some versions of models like the Vauxhall Astra, VW Golf and Ford Kuga are coming into the ECS bracket thanks to inflation.
Electric vehicles are currently exempt from both car tax and the associated ECS, but that is set to end next year.
Any EV registered after April 1 2025 will be liable for the standard rate of tax in line with the post-2017 brackets, including the ECS.
Mike Hawes, chief executive of the industry body, the Society of Motor Manufacturers and Traders (SMMT), said: "The expensive car supplement has been unchanged since its introduction some seven years ago, meaning many more vehicles that were considered normal are now luxury."
Ian Plummer, from Auto Trader, added: "To help aid a smooth and fair transition, we’d like to see the threshold raised to £50,000 for used electric cars – or if we really want to see a government walking the walk when it comes to a fairer, greener future, remove the ECS for used electric cars altogether."
However, an exemption will remain in place for "historic vehicles".
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Any car registered more than 40 years ago on a rolling basis (1983 is the current cut-off) does not have to pay car tax and is not subject to the ECS as a result.
It comes after we revealed where the worst drivers in England live as over 1 million were caught speeding last year.