Ask the expert: Why does my old car cost so much more to tax than newer, more polluting models?
Dear Alex,
The engine of my 2006 Subaru Forester XTE Turbo emits 254g/km, which puts it in a higher tax band; indeed, the day after I purchased it, its road tax increased by £100. It is now 19 years old, dealer-maintained from new and has just 90,000 miles. It's in good condition and I love driving it, but the tax this year was £710, meaning it's worth only scrap value. You regularly review cars that are more polluting than mine and I noticed that although the tax is extremely high in the first year or so, it drops to a figure much lower than mine after five years. How is that so?
– SB
Dear SB,
The answer lies in the shake-up of the tax system brought in by George Osborne in the summer Budget of 2015, which came into force on April 1 2017.
Before this, cars had been taxed based on a graduated system of CO2 emissions. The more your car emitted, the more it was taxed. Subarus always fared poorly under this system, because their turbocharged flat-four engines were never particularly efficient.
From April 2017, however, only the first year's vehicle excise duty (VED) was determined by the car's CO2 emissions. Then it became a flat rate, common to every combustion-engined car, with an additional 'luxury car surcharge' for those with a list price of more than £40,000.
From the outset, I thought this was a bizarre system – penalising buyers of newer luxury cars, while simultaneously weakening the VED system's strong incentive to choose a less polluting model.
As you have found, it's led to certain higher-emission models costing considerably less to tax than your old Subaru. For example, the owner of a 2018 Bentley Continental GT will be paying only £195 a year at this point, despite it kicking out 311g/km of CO2 – the same as the driver of a 110g/km Kia Picanto from the same year will be paying.
The reason was to ensure that tax could be more easily levied on EVs in the future – and it now has been. Nevertheless, the new system still feels like a blunt instrument – a full reassessment of the way it works wouldn't go amiss.
And don't scrap your Subaru! It may be expensive to tax, but it's worth far more than scrap value. I know people who would give good money for a Forester Turbo with the sort of provenance yours has.
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