March 2017 ‘will be the biggest car sales month ever

A SALES flurry driven by buyers looking to beat the new vehicle tax changes will push March sales to record levels, believe industry bosses.

In April, the VED system changes to a more flat-rate approach – most notably it will penalise buyers of cars worth more than £40,000 and only offers a zero-rate fee to electric cars.

That means buyers of new hybrids and low-emitting diesel- and petrol-engined cars, which currently enjoy free VED, will no longer benefit from a discount, instead paying a flat rate of £140 per year.

Andy Barratt, chairman and managing director of Ford, which was the UK’s biggest-selling car manufacturer in 2016, says this March could be huge.

He said: ‘March has always been bigger than September in terms of actual demand, but with a very big tax change on April 1, I think that we will see the biggest single registration month in the history of the UK car industry in March.’

His views were echoed by SMMT chief executive Mike Hawes, who believes we will see a sales surge in March the likes of which the industry has probably never seen before.

‘We expect to see sales of cars costing more than £40,000 pulled forward as well as some others that will no longer benefit from free VED,’ said Hawes.

The tax changes are likely to also see a glut of pre-registrations take place as manufacturers and dealers look to register cars to beat the changes. These would then be held in stock and sold as ‘nearly new’, mitigating the expensive changes – especially on those cars costing more than £40,000.

Hawes added that he was disappointed with the VED changes as they had failed to incentivise buyers into swapping for lower-emitting vehicles.

‘We were disappointed with the proposals when they were announced by the then Chancellor George Osborne two years ago, because the incentive for ultra-low emission vehicles was effectively removed,’ he said.

Everything you need to know about the April 2017 road tax changes

From April 2017, new road tax tax rates will apply to all new cars. As that date draws ever closer, many motorists may be concerned about the incoming changes to road tax bands and how it will affect their pockets and their choice of car.

The Band A threshold of 100 gCO2/km below which cars pay no Vehicle Excise Duty (VED) was first introduced in 2003. Back then, average new car emissions were 173 gCO2/km. However, average new car emissions have fallen to 125 gCO2/km, which means that an increasingly large number of ordinary cars now fall into the zero- or lower-rated VED bands. This also means that the government receives less tax.

Under the new system, first-year payments will be introduced across all bands except for zero emission cars, which will pay £0.

Those emitting more CO2 will pay more tax in the first year, but after that there will be a flat rate of £140 a year. There will also be a new supplement of £310 per year on cars costing more than £40,000.

What are the new VED bands from 1st April 2017?

Emissions (g/CO2/km)
First Year Rate
Standard Rate*

0
£0
£0

1-50
£10
£140

51-75
£25
£140

76-90
£100
£140

91-100
£120
£140

101-110
£140
£140

111-130
£160
£140

131-150
£200
£140

151-170
£500
£140

171-190
£800
£140

191-225
£1200
£140

226-255
£1700
£140

Over 255
£2000
£140

*cars over £40000 pay £310 supplement for 5 years

Five things to know about the new VED bands

  • They only apply to cars registered after April 2017;
  • Cars bought before April 2017 will continue to be taxed under the current system;
  • CO2 output is irrelevant from the second-year onward, with two new flat rates – a £0 VED rate for zero-emissions vehicles and a flat annual rate of £140 for all other cars;
  • Cars over £40,000 are liable for the £140 year two rate as well as an additional annual supplement of £310 for the first five years;
  • Zero emission cars that cost over £40k must pay the £310 supplement. Everything else in the £40k+ bracket will pay £450 a year (£310 supplement + £140 flat rate) until that five-year period is over. From then they revert to the £140 flat rate.

As we previously reported, the supplement has been dubbed the ‘Tesla tax’ and seems absurdly counterproductive. The government says it is to ensure ‘those who can afford the most expensive cars make a fair contribution’, which to us sounds more like a wealth tax than a road tax.

How will the new VED bands affect leasing?

Road tax should already be included in your monthly car leasing price for the full duration of the contract. As the finance company is the legal owner of the car on the V5 document, it is responsible for the tax. Always check your lease agreement.