Tuesday, March 30, 2010

Mr Money: You think fuel's expensive? Try April's road tax increases

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The motorist driving 12,000 miles a year in, say, a 1.6-litre diesel capable of 60-70mpg on the EU's official Combined cycle should average at least 50mpg in real world conditions. As should a supermini with a 1.0-litre petrol engine.

Such motorists therefore buy about 20 gallons a month which, at £5 a gallon, equates to a fuel bill of £1,200 annually. When the price of a gallon hits £6 (if it hasn't already), expenditure rises to £1,400 a year. Equally inevitable is the £7 gallon in the near future. At this point, annual spending at the pumps for the 50mpg driver will rise to £1,680.

Although they probably daren't think about it, motorists achieving only 25mpg in a Range Rover 3.6 TDV8 must double the above figures. A handful of drivers in cars such as the Lamborghini Murcielago LP640, which does nearer 12.5mpg, will need to quadruple them.

But the case for buying a new car with a powerful engine becomes even harder to justify from next month when the Government massively increases the price of vehicle excise duty on thirsty, factory?fresh models.

Traditional heavy drinkers such as hard-core sports cars, big 4x4s and luxury limos are on the Treasury's hit list. But so are some modest hatchbacks, saloons, workhorse repmobiles and family MPVs.

The Government says that from April 2010, anyone buying a new car which sits in tax band M (thereby boasting a high CO2 g/km rating above 255) will pay £950, instead of the current £405, for a 12-month tax disc.

The buyer of the 495g/km-rated Lambo will require this £950 road fund licence. But the driver ordering a cleaner, greener, 294g/km Range Rover will pay the same. And it gets worse because even a new, 25mpg Vauxhall Insignia 2.8 will need a £950 tax disc from next month.

As will most new Jaguars, and every car built by Aston Martin, Bentley and Rolls-Royce. It's another kick in the teeth for the struggling British car industry.

The VED rate for new L-Band cars (ranging from 226-255g/km) will be £750 per annum and that will hit sales of models such as the 30mpg Land Rover Discovery 2.7 TDV6, 29mpg Ford S-Max 2.3 and 27mpg Jaguar XF 3.0.

Owners of Band K (201-225g/km) cars will pay £550, up from £215, and that's bad news for consumers buying new 30mpg models such as the Ford Mondeo 2.3 or Focus 2.5 and Renault Espace 2.0.

Band J (186-200g/km) cars include the 40mpg seven-seater Nissan Qashqai 2.0 diesel, 38mpg Honda CR-V 2.0 petrol and 36mpg Vauxhall Corsa 1.6, which are all having their VED rates hiked to £425.

In band I (176-185g/km) sit cars such as the 42mpg Land Rover Freelander 2.2 diesel and Toyota Avensis Estate 2.2 T Spirit, plus the 38mpg Vauxhall Astra CC, which will require £300 tax discs.

Band H (166-175g/km) cars include the 38mpg VW Beetle 1.6, which will cost £250. Band G (151-165g/km) contains the 42mpg VW Fox, which will cost £155 to tax. Sitting in Band F (141-150g/km) with a disc priced at £125 is the little, 43mpg Nissan Note 1.4. Creeping into Band E (131-140g/km) are sub-superminis such as the 50mpg Chevrolet Matiz 0.8 Auto, with a new VED rate of £110 a year.

Cars occupying bands D-A (rated 130g/km or less) are the big winners as they qualify for free tax discs. The 69mpg Audi A3 1.6 TDI and 63mpg BMW 316d are qualifiers, along with several other diesels and some petrol-engined superminis capable, on paper at least, of 50mpg-plus.

It's worth repeating that the new rules above apply only to motorists buying "new" cars from next month. Owners of existing cars in Band A will continue to pay nothing for discs. Prices will range from £20-£110 for cars in Bands B-E. Those in Bands F?K will need discs priced from £125-£245. Band L cars will cost £425 to tax and occupants of Band M, £435.

• The revised car tax rules and regulations can be found at direct.gov.uk/motoring.

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