‘Luxury’ car tax….a first world grumble

minusFree Member
£40 is definately a luxury car. List price of a Dacia Sandero is about a third of that. Looking at what you can get for £40k,

– Base spec tesla model 3
– Hyundai Ioniq 5
– A posh spec long wheelbase caddy life with the biggest engine, autobox and a couple of grand of extras.

Hell, you can get a focus for under £30k that comes with luxuries like adaptive cruise control!

I think it is a bit like bikes; manufacturers have made their products better and more complex and sold consumers the idea that they still need products with the same brand name. So yes, the base spec passat is almost £40k, but it is a far more luxurious and complex car than the passat I had 20 years ago. That certainly didn’t have luxuries like autodimming headlights, a satnav with integrated ChatGPT or an electric tailgate! I’m not sure that even included air con as standard in base spec.

So the tax doesn’t include everything, but it is a simple tax which makes it cheap to adminster and hard to game.

lol these are all bog standard, bang average cars that you’ve listed.  Go and ride in an S Class, or a Range Rover Vogue, or a 7 series then tell me that any of those  you’ve listed are luxury. I mean Hyundai is literally the non-luxury arm of HMG, yet their base spec family car is only £100 under the ‘luxury’ tax level. It’s not a luxury car, it just isn’t.

yes it is – by virtue of the fact on the well off can afford one.  a cheap car is an i10!

To be able to afford a £40 000 car you need to be earning well above the average.  How out of touch are you?  Two average earners will not take home much more than £40 000 pa

tjagain

To be able to afford a £40 000 car you need to be earning well above the average. How out of touch are you?

It’s not me that’s out of touch here, it’s you.

The only reason things like Passats etc are falling into this tax bracket is because we’ve had high inflation in general, even moreso on cars and the threshold hasn’t been increased in line with it.

Someone who can afford a Rolls, Range and Audi S5 surely isn’t that bothered about a couple of grand a year in rfl?

but maybe someone who can’t really afford them, but has them anyway, might be?

The optics of some here remind me of that guy on QT who thought he was poor – he was on £70K or so.

Free to those that can afford it, very expensive to everyone else.

I mean Hyundai is literally the non-luxury arm of HMG, yet their base spec family car is only £100 under the ‘luxury’ tax level. It’s not a luxury car, it just isn’t.

Hyundai Bayon – RRP from £21,480.

Hyundai i30 Wagon – RRP from £21,720

Hyundai Kona – RRP from £24,990

Hyundai Tucson – RRP from £30,540

The £10k thing is nonsense. This only applies for the 5 years of a cars life, even really heavily depreciating EVs (which are exempt for now anyway) are unlikely to drop 75% of their value in 5 years

scotroutesFull Member
I mean Hyundai is literally the non-luxury arm of HMG, yet their base spec family car is only £100 under the ‘luxury’ tax level. It’s not a luxury car, it just isn’t.
Hyundai Bayon – RRP from £21,480.

Hyundai i30 Wagon – RRP from £21,720

Hyundai Kona – RRP from £24,990

Hyundai Tucson – RRP from £30,540

Yes, you’ve listed a load of different (mostly quite a lot smaller) Hyundais with petrol engines? Obviously they’re cheaper, it doesn’t change the fact that a base spec Ioniq 5 is not a luxury car.

I’m not sure how I can make it much simpler than this:

Passat wagon price in 2020 = £27K  Luxury threshold = £40K

Passat wagon price in 2024 = £40K  Luxury threshold = still £40K

Fiscal drag. £40k car isn’t quite the luxury it used to be.

Plenty of people will be happy about it though as they don’t like others having nice things. Either because they can’t afford them, or because they don’t want others having what they can afford.

I always thought the point was to try and nudge manufacturers towards keeping their cars affordable for us plebs, i.e. you’ll shift more units to the great unwashed if you keep the list price under £39,999 and your customers can avoid an annual penalty. Only people with a bit of surplus wealth won’t be put off by what essentially just amounts to ‘VED for high rollers‘ if you want to believe it’s a ‘jealousy tax‘ or simply the treasury trying to slap people buying toys a bit above their station fine, I guess in the grand scheme of things it’s actually a nice problem to have. But then also:

I knew this at time of purchase and as I really wanted the car went ahead anyway…

If you were always going to whine about a tax you knew you had to pay but were just too impulsive to be trusted with your own money OP, then I don’t really think you can expect much sympathy can you?

While some on here seem to think £30k for a car is pocket change, to a lot of people it’s a substantial spend (I doubt the OP saw it as nothing). Basically if you don’t want to get hit with a luxury tax, stop buying things labelled as luxuries dumbass. But I suspect the status a pricey big boy car infers was part of the attraction though.

Passat wagon price in 2020 = £27K  Luxury threshold = £40K

Passat wagon price in 2024 = £40K  Luxury threshold = still £40K

Superb Estate starting price 2024: £36,175 (according to 2 mins on Google) pretty much the same car, slightly less fancy doodads and a different badge. If you really need people to know you’re doing a bit better than them it’s an extra £4k up front, plus a rolling £400 p/a subscription to be in a club that very few are impressed by ( and that’s coming from someone with an STW membership).

I don’t understand how so many people on a left leaning website are seemingly unaware that keeping a tax threshold stationary over a period that we’ve had high inflation means that the tax system is being made less progressive.

Same thing with the personal allowance.

cookeaa

Superb Estate starting price 2024: £36,175 (according to 2 mins on Google) pretty much the same car, slightly less fancy doodads and a different badge. If you really need people to know you’re doing a bit better than them it’s an extra £4k up front, plus a rolling £400 p/a subscription to be in a club that very few are impressed by ( and that’s coming from someone with an STW membership).

But if they keep the threshold at £40K, it won’t be long until the Superb has to pay it also? ¯\_(ツ)_/¯

I don’t understand how so many people on a left leaning website are seemingly unaware that keeping a tax threshold stationary over a period that we’ve had high inflation means that the tax system is being made less progressive.

Some may say that it was set way too high in the first place and now it’s about right?

These may not be “luxury cars” but they are luxuries and they are cars so no issues with the tax applying.

The (far from) ‘basic’ Passat wagon is £39,610 so just under the threshold and comes with heated massage seats. It’s described as ‘business class’. A 5s scan of the spec list shows it’s a luxury!

I understand perfectly what keeping a threshold stationary does and don’t see that as a bad thing. Many state run agencies are in a mess and/or underfunded. Add in inflation making their costs higher and an electorate that is very anti paying it’s no suprise that none headline grabbing methods like this are used to raise more funds. And let’s be fair those buying 40k value cars, even after a few years of depreciation, have the funds to spend….

This thread really does demonstrate how people are so willing to spend massive amounts on cars for no reason at all because they have bought the marketing hype and want the status of the latest and greatest rep mobile so they can waft along in comfort. If you can afford it fine crack on but if you are drawn to complaining about £600 a year maybe you should not have spent so much on a car.

I don’t understand how so many people on a left leaning website

Its hardly left leaning 🙂

40k is less of a luxury car than it used to be. It’s sufficiently luxury that it’s fairly easy to avoid for anyone who prefers not to pay it (without having to slum it in a poverty-wagon), but low enough that people who want to prove how rich they are can probably find a way to pay it 🙂

My EV was under the threshold at list price (I know it’s exempt) and seems pretty luxurious to me. Heated seats, adaptive cruise control, stuffed with sensors for everything, reversing camera, good hifi, blah blah. Goes like shit off a shovel too. The only annoyance is it doesn’t remember seat position for the different keys. – Certainly better than any other car anyone in my family has ever owned.

Its hardly left leaning ?

More often fallen over (thankfully less since upgrade).

without having to slum it in a poverty-wagon

See the use of this term all over place highlights how out of touch so many are and also how high a pedestal they put  cars on

It’s really unpleasant when it gets all chippy Wolfie Smith on here. We have the same nonsense on the Hank ‘I live in a big house in the Cotswolds’ thread.

It doesn’t sound informed or inclusive, just envious and spiteful.

Applying it to EVs might be a bit premature. The ZEV mandate is already hammering manufacturers with EV sales not yet being strong enough. The gov needs to show it is investing in charging infrastructure to increase buyers confidence in EVs, otherwise introducing an extra tax is going to be all stick and no carrot. We’re going to start seeing very restricted model ranges from manufacturers soon, if EV sales don’t pick up further.

That said, the R5 EV is “only” going to be £23k so there’s lots of headroom up to the £40k in some cases

But if they keep the threshold at £40K, it won’t be long until the Superb has to pay it also? ¯\_(ツ)_/¯

Then don’t buy it at that point. I don’t really understand why you think Mid-sized VAG estates are ‘cars of the people’…

I did a wee bit more curious googling last night, turns out the Ford Puma was the most popular new car in 2024 (who knew) and the ford fiesta was the most popular used car (by virtue of sheer numbers I assume).

We were a nation of affordable hatchback buyers for decades, nowadays it seems we collectively like them jacked up as SUVs or ‘crossovers’ (but they’re basically the same thing) those of us with the desire to drive an estate are outliers, it seems most people are able to find vehicles to spunk money on that sit below that ‘luxury’ price point.

Raising the threshold for luxury vehicles is probably not a priority for the government right now, and much of the population aren’t in a position to be affected by a luxury vehicle tax, having more basic financial issues to deal with.  Those living a more comfortable existence could do with a smidgen more humility before they start complaining about the terrible problems having more income bring…

Ford Puma was the most popular new car in 2024 (who knew)

And how many of them were pre registered by Ford to make their sales look better then they actually are then flood the nearly new  market with pre registered cars to make them more  “affordable”

envious and spiteful

If you’ve grown up in a working class family, and earn a normal wage, then you’ve been used to people using this language about you all your life. Water off a duck’s back.

Pay your taxes and enjoy your working country you live in. It’s probably time for those that can to pay more, so it can work better.

‘Heated Massage seats’ – in a Passat… my point exactly. Who needs heated massage seats in their run around? If you need a massage go to one of them fancy parlours. I just want something that goes, and goes around corners nicely, and does so in as minimal way as possible… I’d also rather have the driving ability left down to me, rather than have 167 beeping nannying comfort devices that reinforce to the driver that they are in fact an incapable moron who can’t be trusted to stay in lane, parallel park, turn on their own headlights, and needs assistance to shut the tailgate. The only major advancement in a recent decades is those special vented Merc seats that can capture farts, now those have their usage…

These may not be “luxury cars” but they are luxuries and they are cars so no issues with the tax applying.

It could be argued that the vast majority of cars now are luxurious compared to the stuff from the 70, 80s, and even the 90s we drove around in until very recently.

Also, I recall very few people actually owning new, or nearly new cars until recently. That in itself is a luxury.

If you were always going to whine about a tax you knew you had to pay but were just too impulsive to be trusted with your own money OP, then I don’t really think you can expect much sympathy can you?

I’m driving an almost brand new car that I love, and I have a other equally great car on my driveway for when the suns shining. So I’m not seeking any sympathy whatsoever. Least not from folks who drive cars that would make me question my life choices if I had to drive them every day

Believe it or not starting a thread about something I feel is a poorly implemented tax, on a miserable weekend when I have nothing better to do, doesn’t mean I sit wringing my hands about it. I feel it’s an interesting topic of discussion that I knew would illicit conflicting responses, especially on here. Perhaps a better question would have been, why should I pay an expensive car tax on a car I bought for 28k, when my neighbour paid 35k for theirs and doesn’t? Again I’m yet to hear a reasonably argument for that one (other than the tax one).

Luckily I can afford the tax (not the same as thinking it’s a fairly implemented one). Anyway, sun’s coming out so I’m off out for a ride on my 12k sworks road bike. Now just wait until you hear my thoughts on how much that is overpriced…;-) I hope your tiny violins are at the ready…

Least not from folks who drive cars that would make me question my life choices if I had to drive them every day

Hmm…

It’s probably time for those that can to pay more, so it can work better.

They have been, tax burden on upper earners has been increasing for decades, if nothing else through freezing of personal allowances and seen universal benefits like child benefit disappear. Not saying I disagree with that but the suggestion that higher earners haven’t already seen significant increases in their contribution is lazy and rude. The super rich on the other hand…….

FWIW my car slipped into the luxury tax bracket by accident, list price was just below the threshold when I ordered the car, took nine months to arrive due to post covid and Ukraine disruption during which time the manufacturer put up the list price and that’s what used to determine what your tax is. Annoying but not exactly world ending.

did a wee bit more curious googling last night, turns out the Ford Puma was the most popular new car in 2024 (who knew) and the ford fiesta was the most popular used car (by virtue of sheer numbers I assume).

We were a nation of affordable hatchback buyers for decades, nowadays it seems we collectively like them jacked up as SUVs or ‘crossovers’ (but they’re basically the same thing) those of us with the desire to drive an estate are outliers, it seems most people are able to find vehicles to spunk money on that sit below that ‘luxury’ price point.

The puma is a whopping 2.5cm taller than the last fiesta, which is close to how much cars grow over generations anyway. The “SUV” factor is pure marketing/styling (same as the juke/Clio combo)

So basically OP what you’re trying to express is:

Enjoy your ride…

The puma is a whopping 2.5cm taller than the last fiesta, which is close to how much cars grow over generations anyway. The “SUV” factor is pure marketing/styling (same as the juke/Clio combo)

Fascinating.

The simple anwser is to buy a car that’s over 5 years old – it will easily last another 5. Running older cars is not the headache it used to be 20 years ago.

I always thought the point was to try and nudge manufacturers towards keeping their cars affordable for us plebs,

I asked on the first page why the tories introduced the tax. We seem to be keen to imagine all sorts of motives about what it might encourage, or discourage, or punish, many of which seem to be values at odds with the government that introduced the scheme.  But nobody is all that keen to know what that actual rationale might be

It seems the only ‘point’ was simply bit of progressive taxation

From gov.uk:

“General description of the measure
Since April 2017, cars with a list price exceeding £40,000 pay an additional supplement as well as paying the standard rate, which means those who can afford the most expensive cars pay more than the standard rate imposed on other drivers.”

So it’s a simple affordability based tax. If you’re paying it then celebrate the fact that you’re one of life’s winners.

While the threshold has effectively shifted over time its an entirely avoidable tax as nothing is forcing you to pay it.

Thats why the this particular  additional VED only applies for the first few years of the vehicle’s life. Other VED measures that relate to levels of emission etc are designed to influence the actions of  all road users and therefore run for the lifetime of the vehicle and influence the actions/choices of all drivers

+1 for the ‘issue’ here being fiscal drag. 40k doesn’t buy you a luxury car. I’d view that threshold being a well specced german car (5 series, A5 etc). And when the tax was introduced it was around that mark.

But the tax is needed on second hand cars else you open it up to avoidance, just swap it into your partners name the day after you bought it and boom its a second hand car.

Hmm…

To clarify that comment. Nowt wrong with driving cheap, unexciting cars, if you dont care about cars and just see them as a mode of transport from A-B. But as someone who likes nice cars (cheap or expensive) I’m definitely not that person. Just like I’d find it thoroughly depressing to have to go out every day for a ride on the cheapest road bike I could find that worked…

Folks spend their hard earned on things they enjoy and value in life. I’m sure some folks on here find value in purchases I would find utterly pointless.

“Perhaps a better question would have been, why should I pay an expensive car tax on a car I bought for 28k, when my neighbour paid 35k for theirs and doesn’t? Again I’m yet to hear a reasonably argument for that one (other than the tax one).”

The tax would be open to fraud and much more complex to collect if based on used values.

And if you’re looking to increase motoring taxes then this seems a good way of taxing those who can afford it a bit more.

It could be argued that the vast majority of cars now are luxurious compared to the stuff from the 70, 80s, and even the 90s we drove around in until very recently.

Also, I recall very few people actually owning new, or nearly new cars until recently. That in itself is a luxury.

This is all very true. Cars have got bigger, faster with more bells and whistles. Partly because of consumer greed but mostly company ‘upselling’ and flattering our collective egos as to where normal ‘need’ ends and luxury ‘wants’ begins – as aptly demonstrated on this thread. As a society we could have just upped the efficiency and safety and made and bought cars that did everything we needed for a smaller percentage of annual income, but we chose the other path.

However, the biggest aspect of car progress for me has been reliability. A 6 year old car is every bit as reliable as a 3 year old car used to be. A 10 year old car has less corrosion issues now than a 5 year old car used to. You could argue both of those are wildly pessimistic now – modern cars are even better than that. With that in mind the habit of a section of the market buying new and getting shot after 3 years or less is very distasteful to my mind.  Sure it means people like me get to pick up the scraps of nearly new 3 year old cars at knock down prices but we should be encouraging everyone to drive cars for longer. Worse, a lot of the least reliable features strapped on to cars are the extra extra bells and whistles that make the original purchaser go weak at the knees but then need to be ‘managed’ by future owners. If cars went through hands slower with folk holding on to them longer at each step, not least the original purchaser, this would be less of a problem.

One of the benefits of this tax is that cars under 5 years old are less attractive on the 2nd hand market. The original owner will more likely have to take a bit more of a hit or keep on driving it. It’ll also encourage people to keep their 2nd hand cars longer before they chop it in for their next nearly new 2nd hand car.

If I had my way I’d also consider a tax where if you sell a car you bought new (and I’d add delivery milage cars into that to close that loophole – anything less than a year old with less that 5K miles on clock counts as new) within the first 5 years of ownership you pay a 10% levy of it’s original purchase price. That would encourage new buyers to look after cars better, favour reliability over bells and whistles and look for brands with longer warranties. I’d probably end up buying older cars because it but as I say, a 5 year old car now is every bit as good as a 2-3 year old car 15-20 years ago.

So it’s a simple affordability based tax. If you’re paying it then celebrate the fact that you’re one of life’s winners.

Which I’d be all for. But the way it works means it’s not a simple affordability tax. I’m not questioning a tax on expensive cars. And I don’t particularly care if the threshold is 20, 30, 40 or 50k. But I do care that it’s not based on the value of the car at time of purchase. That is the element I think is nonsense

Simple solution , as you pay the additional tax from second year onwards, just chop it in and get a new one just before its birthday!!

peasants 😉