‘Luxury’ car tax….a first world grumble

Horrible 40k cars? Really. Even the cheapest of new cars like a Dacia or an MG is pretty good thing these days. “Dull” or cheap,safe,reliable transport is what most people want.

Indeed and a £40 000 car is way beyond the means of the majority of the population

I find it in friendships and experiences.  I feel sorry for those who need to buy stuff to prove their own value

you know you can have friendships, experiences and own nice stuff too? They aren’t mutually exclusive.

although I have two shit cars and no friends. 😉

Really ? I think leases are financially savvy way of getting to drive a nice car.

Pay the depreciation on a new car, or for the same repayment loan, pay for the capital AND depreciation on a three to five year old car? The latter leaves you with capital. Personally I would be purchasing capital. Although this may depend on finance rates.

Most purchasers look at the monthly repayment.

Tbh the way cars are taxed at the moment does seem to be a massive mess that rarely makes much sense, or provide enough disincentive to the most polluting, biggest and/or dangerous cars.

Maybe it’s just so when road pricing comes along it looks like the better option.

Indeed and a £40 000 car is way beyond the means of the majority of the population

If they had to find 40k to buy it I’d agree, but they don’t. How much does it cost per month? Car prices have gone insane in the last few years but the cost to finance/lease has not necessarily gone in the same direction.

We had a 25k list price car in 2014, just below 40k (so missed the excess tax) in 2018 and 58k(!!!) last year. The cost per month hasn’t changed that much.

We also have a 13 year old car with 130k on the clock that if you work out what it has cost per month would be more than you’d think. Cars are expensive unless you can fix them yourself.

because the first thing they do is make an internet post to humblebrag about how unfair the Expensive Car Supplement is?

Well I’ve had it for 2 months so not the first thing really. And only on stw would starting a thread with ‘I can’t afford’..followed by stating I bought a car worth less than the average price of a new car in the uk be considered a humble brag. Some of you are down right weird..

Gold

Why is it gold? You are obviously implying that I only bought the car to keep up with my neighbours yes? It’s a second hand estate ffs not a lambo. Get a grip you judgemental fool.

“Dull” or cheap,safe,reliable transport is what most people want.

Absolutely! You can’t really buy a crap car any more. They are fundamentally pretty much all one and the same, just with different badges. The software / gadgets is where – to some extent – they differ. But physically and build etc; if you put someone blindfolded in any car of the same class from any manufacture – they’d be hard pushed to tell a difference! Which as an average consumer (which almost everybody is) is great.

If they had to find 40k to buy it I’d agree, but they don’t. How much does it cost per month?

Err….

You can’t really buy a crap car any more

Well that’s perhaps why they cost so much new! Average cost of a new car is 35k apparently! You can certainly still buy crap cars second hand, I know this from recent exp!

Err….

When I considered pcp it would have been about 550 quid for a 40k ish car on pcp. Alot of money every month no doubt but between a working couple it’s clearly affordable for many

Does anyone actually buy new cars any more? The bulk of the second-hand market is surely former lease vehicles. I’ve been in company cars / PCH cars for years, there is no way in hell I would countenance buying a brand new car. The last car I bought outright was a Vauxhall Cavalier which I think cost me £800 twenty years ago (so about twice that today).

How about we scrap VED completely, add a penny on a litre of fuel. The V6 gas guzzlers and the high mileagers pay more and rightly so. The whole point of the tax disc when I was first driving (aside from, well, tax) is that it was the last thing you got when sorting your paperwork out, you needed everything else in order first. You then had a visible indicator in your windscreen that the driver had a licence and insurance. Today with ANPR and everything computerised it’s archaic.

Well I don’t know when you bought that but look at the market now, the average house price in England is £310K.

Four years ago. The thing about averages is, there will always be a variance either side, otherwise it would be a single figure. I paid half that for a 5-bedroom mid terrace in decent nick with three reception rooms and a huge kitchen, because I bought in Burnley rather than London.

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.

Why would you not want to be comfortable? That’s an idiotic argument. Wallpaper serves absolutely no purpose beyond looking pretty, is the inside your house down to bare brick and plaster? I assume you don’t have wild extravagances like “furniture” when instead you can sit on an upturned packing crate next to a table made from broken-down pallets and sleep on the floor rather than having the latest and greatest “beds” that you can waft along in. Plenty of people spend a lot of time in cars.

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.

This though I do agree with. I’ve seen Ferrari owners moaning about a wheel nut costing £200. If you can’t afford a £200 wheel nut, you’re driving the wrong car.

How about we scrap VED completely, add a penny on a litre of fuel.

Because that penalises rural populations who are already in more fuel poverty.

Err….

Not sure what’s difficult to understand?

The cost per month hasn’t changed that much.

I disagree . I’ve had 2 BMWs in the past, the 2nd one was £330pm To get a similar BMW today would be roughly £700-£800pm

All cars are not roughly the same these days, the more you pay the better they get. What puzzles me is why people will spend £40k on a really bad modern day Golf (ID3)

Last 2 cars we have bought was a Merc that new would have been £70k. The sales neglected to tell me about the £40k plus tax when the ‘free’ 6 months tax ran out. It does come as a bit of a shock when you buy a car for £32k

I didn’t mi d paying £32k for a Merc that is big, very comfortable, safe , quiet etc etc

I didn’t like paying £22k for a 2nd hand Polo. It’s ok but no where near the same league of the Merc.

So back to op, I think unfortunately garages know they can’t shift slight 2nd cars as it is, if you told perspective buyers about the £40k tax they would sell even less

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.

As I’ve said numerous times, I think it’s an unfair tax, that’s my opinion. Some agree, others dont. I certainly never said I couldn’t afford to pay it. The title of the thread is ‘first world problem’ which is perhaps a clue…

The thread was started about tax, but appears to have descended into a debate about the rights and wrongs of folks spending their own money on stuff that other posters don’t think they need..and their motivations for doing so..

Typical stw..

So back to op, I think unfortunately garages know they can’t shift slight 2nd cars as it is, if you told perspective buyers about the £40k tax they would sell even less

Yeah.it was a bit cheaky that on the site it actually stated 120 per year tax and the first time they actually mentioned the extra cost was as i was signing the forms

that said I was already aware of it, but only through own research beforehand. But yeah, they certainly don’t advertise the fact.

because the first thing they do is make an internet post to humblebrag about how unfair the Expensive Car Supplement is?

Not sure why you read it that way, I read it that someone bought a car not knowing they had to pay tax on a value they hadn’t paid .

i was caught out by this too . The sales team certainly don’t warn you

Also while we are it , why not bring a tax in on push bikes. No one needs a polish bike that costs over £500 ( and that’s being generous)

Wallpaper serves absolutely no purpose beyond looking pretty, is the inside your house down to bare brick and plaster?

I’d be happy to see a tax on £40000 wallpaper too 🙂

I’d be happy to see a tax on £40000 wallpaper too

The existing £6700 tax is not enough for you?

Pay the depreciation on a new car, or for the same repayment loan, pay for the capital AND depreciation on a three to five year old car? The latter leaves you with capital. Personally I would be purchasing capital. Although this may depend on finance rates.

Most purchasers look at the monthly repayment.

By “Capital” you mean owning a car (or at least a proportion of it)? Either way you’ll always be chipping into a depreciating asset, coupled with interest what you end up shelling out is never equivalent to the value of what you end up owning in the end, which is probably only going to become the deposit for the next round, cars are a bit of a pyramid scheme TBH, we only use them because of some rather fundamental flaws with our culture now.

There are plusses and minuses to Finance, Leasing and outright purchase, as ever with STW pick a Team and be a dick about it if you want. We chose to Lease because it allows us to control a major outgoing on transport for a couple of years and will not need us to dig into our savings, it avoids the financial shocks of various indeterminate maintenance costs that slowly start kicking in once any car gets past it’s 3rd Birthday. Right now we just want stability and reliability, I’ve found that aspect variable with pretty much every car I’ve owned before and it only gets worse with age, am I a mug? Perhaps…

As for wanting to appear wealthy, yeah you could do that with a lease (as well as some flavours of PCP), that would also be a mugs game of course, but it’s far from the only reason someone would choose to lease a car.

Because that penalises rural populations who are already in more fuel poverty.

Is this not the exact same argument as “luxury cars”? If you can’t afford to live where you live then move. How many of that rural population in fuel poverty are out on their bicycles?

I live in Burnley because it’s dirt cheap and I have everything I could possibly need on my doorstep. It’s ace. It’s quicker to walk to Tesco or Lidl than drive there. I can throw a brick out of the back window and hit a curry house. Next door to that is a corner shop and next door to that is an independent baker.

Sure, I could move to Surrey or Keswick or London or the Outer Hebrides, but I’d then waive the right to whine on about property costs or fuel costs or the lack of fibre Internet or that I can’t get a pizza delivered inside of 48 hours or that the nearest corner shop is in the next time zone. We all make our choices, I chose to buy a 5-bed house for £160k and drive a 1-litre Seat Arona, if I lived within the “rural population” then as lovely as that may be I’d likely be in poverty as well.

By “Capital” you mean owning a car

I “did the math,” for the same outlay as a lease I could pay off a new car in ten years and end up with a ten-year old car as an asset. In which case I might as well just go buy a ten-year old car from the outset, right on the cusp of where the big bills start arriving. Or I could have a brand spanker every 3-5 years.

I may well be wrong, but I think that the only sensible route to car ownership is either PCH or bangernomics. There is no middle ground which makes any sense to me, the arse dropped out of the “nearly new” market 20 years ago.

Hmm.  Not sure that stacks up.  Lease on an i4 is £630/m for 4 years/8000mi on salary sacrifice.  A 2y old one is £30k.  Insurance, tyres and tax add another £1k so the SH BMW is yours for £710 (assuming a 10% deposit) a month but at 4 years you own a 6y old car likely worth 15k.  If you want to shield your outgoings.  You can extend the manufacturer warranty for £680/y.  So yes, over 4y, you’ll spend an additional £5k, but you’ll be over £10k up on a lease and that’s starting from scratch.  For your next car in equivalent terms.  Your loan would be only £15k rather than £27k as you already have £15k in your existing car.

Gold

Why is it gold? You are obviously implying that I only bought the car to keep up with my neighbours yes? It’s a second hand estate ffs not a lambo. Get a grip you judgemental fool.

Even better, keep swinging champ you are doing great ???

a ten-year old car as an asset

A depreciating car is not an asset.

A depreciating car is not an asset.

I mean if we’re being technical about it it’s a non-current asset but sure.

Let’s be honest we all buy cars for different reasons in different circumstances so different approaches to finance make sense. What struck me buying recently (my first time ever in 40 years on the planet) was how the PCP option was by far and away the path of least resistance, and if you’re looking to actually own the car at the end you need to do your own sums and really derail the finance train otherwise you’re gonna end up way overspending on interest alone.

The better question is what will happen to those £42K EVs.  When the grant was limited to lower priced EVs all of a sudden a load of them changed price to qualify.

There is a touch of treasure island with cars like there is many things, the government may be sensible in seeing what happens before altering this rule.

derail the finance train

Jesus wept. 8am on a Monday. Go and sit on the naughty step

A depreciating car is not an asset

Yes it is, it’s just technically a depreciating asset

As for the expensive car supplement, I’m in favour of it, I just think the current threshold it too low, especially for EVs. I also wouldn’t be opposed to a second band at £100k with the supplement rising to £1k

I’ve been thinking about this – while OP has my sympathy, and I do think we need a progressive ‘council tax band’ style approach to VED, I’m not that sympathetic really to the issue of higher VED rates fora combination of newer, bigger, more polluting or very powerful vehicles.

Yeah.. But you have a diesel volvo, so ultimately the jokes very much on you..;-)

I’ve been designing luxury and premium cars for 25 years now, and i still think that the pinnacle of large family cars was one of the last generation V70s, add AWD and you probably had the most flexible, usable full size family car on the market.

Does anyone actually buy new cars any more?

Those who buy cars with funds they actually have are very much the smallest group, those who get loans (secured or unsecured) leases, PCP/finance/whatever make up the vast majority of private owners, but company cars and/or salary scarifice are (probably) the biggest single group, depending on how you define the boundaries between all the different ways to finance them.

And IIRC, VWs market placement is usually referred to as sub/semi premium to premium. Audi runs from premium into luxury. Many 40k cars will probably be classed as around the middle of premium, depending on their size! They might appear luxurious, but comparing a 40k Passat to something similar sized at twice that, it isn’t really. Very comfortable and competent, but not luxury.

The sales neglected to tell me about the £40k plus tax when the ‘free’ 6 months tax ran out. It does come as a bit of a shock when you buy a car for £32k

Did you vote for Brexit too? 😉

Putting aside the left leaning green eyed monster and this very apposite comment above:

 as ever with STW pick a Team and be a dick about it

I buy pre-reg cars every 5 – 7 years, pay cash, service them properly at the Dealers and then trade for another. If they need tyres, work or repairs, they get it – properly ie they are looked after.

After this I’ve spunked a load of cash. More than if I ran a 20 year old something or other on a shoe string for each of us and possibly more than if I leased. I’m sure the lease companies buy more cars than me and probably buy cheaper which should be reflected in the lease costs.

I mitigate the ‘new’ cost by buying pre-reg. My last buy was ~4 years ago (the week before lockdown 1). I paid £30k for a pre-reg car listed at £54k. It had 50 miles on it and was registered 4 months previously. So, I’ve been got by the expensive car tax. No complaints.

At the end of my self imposed term, I’ve still got a thing with value in it. Squabble over calling it an asset all you like – it’s a depreciating asset, simple.

That value can be converted to cash if my circumstances change or rolled over into the next spin of the wheel. Again, I can look at the options and choose the most appropriate FOR ME at that time.

I recognised not everyone has ready cash to do this and this is not a brag (humble or otherwise). We built a reserve by making life choices and not overreaching. I’m not talking about sackcloth and ashes just sensible personal finances. And for the chippy working class comments above, best not to judge too harshly as you don’t really know people’s backgrounds on here.

The main issue (I feel) is people want it-all-now. Regardless of age, experience, financial situation, they ‘deserve ‘ a treat. The mechanism for overextended themselves is readily available. So you see people in £200k houses driving £100k cars. Bonkers. But if that’s their priority, so be it. Who are we to judge?

i havent read everything here, but i think a lot of owning a ‘luxury’ car comes down to what you value in life.

the costs of cars blow my mind these days, as i have rose tinted spectacles of yesteryear where i could buy the latest and greatest hot hatch at the time for 14k (Clio 182 cup). If i want the same today, its 45k-50k (Honda Civic Type R). When a bog standard Polo costs 20 plus grand for a base model… you realise the world has changed!

I purchased a hot hatch recently, and after a mere 4 weeks, i am selling it back to the dealer. Its a lovely car and i can afford it, but i’d rather spend the money on bikes and holidays. Thankfully it hasnt been too of an expensive lesson/realisation. But i can appreciate why some people are happy to spend much more on a car. if thats your thing, thats cool. Like many would spin on their head at the cost of a bicycle.

And if you want to talk luxury cars….. the company i work for makes parts for a car that has a retail price of £2.6 million….. what does your salary have to be to afford one of those!

Anyway, each to their own i say. whether the tax system is flawed or not!

Putting aside the left leaning green eyed monster 

I don’t think it’s jealousy in most cases. If I’d posted a thread saying ‘look at my 60k camper van’ the stw masses would have been creaming themselves with excitement despite it being well out of financial reach of most (including me). And whilst I have no Interest in such a vehicle, I can appreciate why someone may want one

Some people however seem to lack the basic comprehension that what they want in life is not what others want. And thus question your motivation for wanting it.

Not sure if it’s a stw thing, or an internet thing in general, but either way it’s really a rather unpleasant trait. Noone I know in real life has an attitude like that..

I don’t think it’s jealousy in most cases.

Thank you for seeing that

Putting aside the bickering about posh (or not) cars……

With the current ‘road tax’ and fuel duty model running out of steam as EVs come on line…how would you like to see a similar amount of dosh raised for our collective coffers?  For context fuel duty (according to a quick google) raises £23bn or 2.2% of all monies raised by government and £7.3bn in ‘Road tax’.

£30bn is a lot of dosh – duck houses don’t build themselves you know….

how would you like to see a similar amount of dosh raised for our collective coffers? 

Reworking VED to become a weight based system for electric cars.