Is there a Lower Tax on Eco Friendly Cars? - Autos

<p>Taxation on cars is often quite a complicated business. Each government has their own policy and uses varying factors to determine how much drivers pay. In the UK, vehicles are charged in accordance with their performance (engine size) and CO2 emissions. </p>

<p>In this scheme, cars are rated with a letter - A to M. This covers the full spectrum of emissions, running from 100 grams of carbon dioxide for each kilometre driven (g/km) right the way up to those emitting over 255 g/km. The lower your vehicle's rating, the less you have to pay in tax. </p>

<p>The disparity in cost is quite stark and provides greater benefit to those who have cars that are of an extremely low emission rating. Invariably this includes a number of eco friendly cars, such as hybrids. Up until April 2011, these 'green cars' would also receive a 10 discount on their tax; however, this particular rebate has now been discontinued for UK drivers. </p>

<p>The age of a vehicle can also have an impact in the amount that you pay, especially in the case of brand new cars. Drivers buying a brand new low emission run around won't have to pay a penny for their first tax year. This particular offer is valid for any vehicle that emits up to 130 g/km. </p>

<p>However, whilst those cars in the 131 to 165 g/km category pay the same as all other drivers, those buying a new vehicle with emissions of 166 g/km will have to cough up a significant amount over and above the standard rate. For example, if you were to buy a brand new gas guzzling sports car that had emissions in excess of 255 g/km (the highest on the scale) then you would have to pay over double the 460 charged for those that are two years or older, a staggering 1,000. </p>

<p>Therefore if you're considering buying a Vauxhall Insignia Elite 2.8i V6 Turbo 4x4 (258 g/km), Mercedes Benz E-Class Estate 500 Sport (260g/km) or Land Rover Defender 110 Station Wagon (291 g/km), you can expect a pretty major tax bill in your first year. This kind of scheme helps to encourage people to buy more economical and environmentally models. For instance, if you were to buy a new Fiat 500 0.9 (92-95 g/km), Toyota Prius/Auris (as low as 89 g/km) or a Smart fortwo (from 86 g/km) you wouldn't have to pay for your tax in the first year, or indeed at any other time. </p>

<p>This pricing structure only applies to cars registered within the last 10 years though. So any vehicle that was registered before March 1st 2001 will pay a flat rate based on engine size, which is currently set at 130 for those up to 1550cc and 215 for those above this threshold. </p>

<p>But to return to the earlier point, any auto running on lower than 100 g/km (such as those mentioned above) will be entitled to free tax under the current legislation. This then rises to 20 for anything running up to 110 g/km, 30 for 120 g/km, 95 for 130 g/km and all the way up to 460 for the very highest emission ratings. Therefore there are always going to be significant savings to be made if you choose to invest in a smaller, more economical and environmentally car. </p>

<p>So when you come to buy your next car, make sure you consider all of the cost factors involved. Look into the emissions and see what you'll have to pay for your tax, as well as other issues such as insurance. An environmentally friendly option won't just help you save at the petrol pumps each month, but could lower your annual costs too.
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