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Luxury Car Tax


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Good evening all.

Quick question on the luxury car tax on new cars with a list price over £40k. ( applicable from the start of the second licence -currently an additional £335 per year on top of the normal rate for the following 5 years). I have negotiated a deal on the new NX350H with a list price of just under the 40k threshold. I understand Lexus will apply a price increase across the NX range of approximately £1500 from January 2022. The delivery time is estimated for July/August 2022 by which time the new  prices will be in effect.  My understanding is that cars with a list price of over 40k at the time of first registration will be liable for the luxury car tax. So although I will pay less than 40 K for the  car, by the time it is registered next year, the updated  list price will now exceed this figure & so luxury car tax will be automatically applied. Have I interpreted the rules correctly? if so It looks like this extra tax will now be applicable to even the base NX model going forward 😩. Thanks in advance. 

Steve.

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My understanding is the "list price" used at the time of first registration to set the VED will be that which was in force when the vehicle was purchased. 

Also it doesn't matter how much one manages to negotiate off the list price, that full list price is used to set the VED

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Thanks for the swift reply NemesisUK. The current list price for the new NX300H was quoted by the dealer at just under 40k using their current price list. The DVLA (Form V149 - attached) states they use the list price at the time of first registration not at the time of purchase- hence my confusion! 

v149-rates-of-vehicle-tax-from-1-april-2021-for-cars-motorcycles-light-goods-vehicles-and-private-light-goods-vehicles.pdf

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I'm in the same situation trying to keep under the threshold, slightly off topic but did you actually manage to negotiate a discount? I'm just getting offers of full list price (I'm looking at the 350h premium pack)

Thanks!

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The VED is based on the full manufacturers list price at the time of registration. The owner then pays the supplement in years 2 to 6 of the cars life. This started in 2021..

If you think it will be taken from the sales invoice which can be manipulated in many ways then I hope you have a drink for when Father Christmas comes down your chimney tonight 😂😂

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Thanks for the replies guys. 
Seadoo 180 - no discount from dealer on the NX 350h with premium pack but a generous part exchange on my current NX . No deals on the new NX & no finance deposit allowance either if you take it on PCP ! 
I agree with comments from Richard1200- it would appear that even if you keep to the basic spec NX with a current list price under 40k that by the time it is delivered & registered next year the price increase due in January will have pushed the list price to over 40k & therefore subject to the additional VED. So it looks like there is no avoiding the Luxury car tax on the new NX . Will now rethink my purchase plans for the new NX - maybe wait for the FDA to be offered further down the line. 
Merry Christmas & thanks again for your replies. 
Steve. 

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25 minutes ago, General Mess said:

Thanks for the replies guys. 
Seadoo 180 - no discount from dealer on the NX 350h with premium pack but a generous part exchange on my current NX . No deals on the new NX & no finance deposit allowance either if you take it on PCP ! 
I agree with comments from Richard1200- it would appear that even if you keep to the basic spec NX with a current list price under 40k that by the time it is delivered & registered next year the price increase due in January will have pushed the list price to over 40k & therefore subject to the additional VED. So it looks like there is no avoiding the Luxury car tax on the new NX . Will now rethink my purchase plans for the new NX - maybe wait for the FDA to be offered further down the line. 
Merry Christmas & thanks again for your replies. 
Steve. 

At least you can consider your purchase, I did not know about the extra cost until about a month after I took delivery, what a Wally I am. Still would have bought it though. I did wonder why I got almost £3000 off the list price and a good trade in. I probably will not be around to worry about the later years anyway  😂😱😂😱😂😱

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Ive pondered on this extra tax.  It’s £30 a month which it will more than save in fuel over my 300h and I’ll end up in something I’m not quite happy with - I do love the build quality.  I’d be happier without it but I’m not cutting my nose of over that.  350h it is.  

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How about all pre-reg deal, I know Lexus was doing this for years and there are many models in odd years, before they were even made. Is that not an option i.e. that because you bought the car under old list price and it get's registered for 2021 Q2 (71 plate)? 

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Really don't understand the worry anybody has over a relatively small extra effective monthly cost to their initial extravagant ££££ purchase ......  seems to me a bit like people being shocked, horrified at the mpg they're getting when buying a V8 and scrimping to save fuel pennies 

Doesn't add up to my mind ...  but then my thought processes rarely can figure out how people think these days :whistling:

Malc

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3 hours ago, Malc said:

Really don't understand the worry anybody has over a relatively small extra effective monthly cost to their initial extravagant ££££ purchase ......  seems to me a bit like people being shocked, horrified at the mpg they're getting when buying a V8 and scrimping to save fuel pennies 

Doesn't add up to my mind ...  but then my thought processes rarely can figure out how people think these days :whistling:

Malc

Quite simple Malc, £30 a month is broadly speaking £45 pm/540 pa or say 5k before tax after 10 years. So in your case £14000 for your car in incremental tax. I don't consider that to be insignificant unless of course you get free money from the Nat West Bank? Just another additional tax based on pandering to the lowest common denominator 

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6 hours ago, Phil xxkr said:

Quite simple Malc, £30 a month is broadly speaking £45 pm/540 pa or say 5k before tax after 10 years. So in your case £14000 for your car in incremental tax. I don't consider that to be insignificant unless of course you get free money from the Nat West Bank? Just another additional tax based on pandering to the lowest common denominator 

It’s for 5 years max so your 5k before tax after 10 years is irrelevant, why state the before tax sum anyway?

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13 hours ago, Mossypossy said:

Most I have ever spent on a car in the last 30 years is about £7k. (not a Lexus even)

Agreed, if I was fool enough to part with £40k+ on a car I would deserve to be hammered by the government.

I don’t think anyone that is running round in any NX really cares about what you run about in or accuse of being a fool. I could argue the same for anyone who puts their bank account over their safety but I’m not interested in what you do.  

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14 hours ago, Phil xxkr said:

Quite simple Malc, £30 a month is broadly speaking £45 pm/540 pa or say 5k before tax after 10 years. So in your case £14000 for your car in incremental tax. I don't consider that to be insignificant unless of course you get free money from the Nat West Bank? Just another additional tax based on pandering to the lowest common denominator 

What on earth are you talking about?  If it’s the extra on a 40k+ car, it’s £30 a month for years 2 to 5 which is £1440 whichever distorted way you look at it.  Once you get to paying over 40k for a car, £30 a month doesn’t register.  The same goes for insurance and tyres or even metallic paint, we’re going to pay more than running a Focus but that’s the result of buying a luxury car.  

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On 12/24/2021 at 12:27 PM, Linas.P said:

How about all pre-reg deal, I know Lexus was doing this for years and there are many models in odd years, before they were even made. Is that not an option i.e. that because you bought the car under old list price and it get's registered for 2021 Q2 (71 plate)? 

It’s certainly an interesting point and I don’t know the answer but if we’re talking new NX, it wouldn’t apply.   

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28 minutes ago, Don C said:

What on earth are you talking about?  If you it’s the extra on a 40k+ car, it’s £30 a month for years 2 to 5 which is £1440 whichever distorted way you look at it.  Once you get to paying over 40k for a car, £30 a month doesn’t register.  The same goes for insurance and tyres or even metallic paint, we’re going to pay more than running a Focus but that’s the result of buying a luxury car.  

^^ Agree. Regardless of what we think of (any) Government, they do need to collect tax in order to provide the services we (think we) need. This tax is pretty progressive - if you can afford to buy a car which is over £40k new before it is five years old, or choose to do so, then I consider it fair to tax more heavily. 

From my perspective the rules are quite transparent. Nobody is forcing anybody to buy a car at this price - it’s all about choice of how one spends one’s money.

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14 hours ago, Phil xxkr said:

Quite simple Malc, £30 a month is broadly speaking £45 pm/540 pa or say 5k before tax after 10 years. So in your case £14000 for your car in incremental tax. I don't consider that to be insignificant unless of course you get free money from the Nat West Bank? Just another additional tax based on pandering to the lowest common denominatyeaor 

If you can afford over 40k£ for a car, you can certainly afford 30£ more a month. It is a lot cheaper than paying 1,809 euros per year for a car which costs 3,700 euros and those who would like to buy it can't certainly afford to pay such a high tax.

For the GS I just bought, I will pay 790 euros until I keep the car even though the car is worth only 8,250 euros now and the price will of course decrease in the next years but the tax will stay the same.

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26 minutes ago, First_Lexus said:

^^ Agree. Regardless of what we think of (any) Government, they do need to collect tax in order to provide the services we (think we) need. This tax is pretty progressive - if you can afford to buy a car which is over £40k new before it is five years old, or choose to do so, then I consider it fair to tax more heavily. 

From my perspective the rules are quite transparent. Nobody is forcing anybody to buy a car at this price - it’s all about choice of how one spends one’s money.

I’m not sure it’s fair because we pay a proportionate amount of car tax and VAT but as you say, it is what it is, it isn’t hidden.  

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Just a few observations, if I may.

I distinctly remember the so called "Luxury tax" was once the same description used for VAT. As sure as night follows day, it will become a regular tax for the vast majority of car buyers.  The luxury tax is now based on a list price of the car and unless you are extremely naive do you think that the 40K threshold will increase? Please do remember the UK tax burden is increasing (and was long before covid) with what are now fixed (typically till 2026) personal tax thresholds, inheritance tax, life time allowance, NI increases to name just a few. The return of inflation will force many to pay more as a consequence and whilst many may think they will either remain unaffected, trust me more and more will contribute more and more. Your Ford Focus may currently have a list price of £25K, but it won't in five years time and probably more like £30K and that's without the additional costs to achieve some newly created emissions standard.

The point is we all need to budget to ensure we live within our means, but vehicle taxation has to my way of thinking been a monumental ***** up. Even now, there are owners of older cars that pay more than they would or indeed should even if their cars were new and fell into the "Luxury tax" bracket. This is as a result of a poorly calculated budget by those that really should have done better, i.e. our government or if you are being pedantic, the DVLA. I am sure there will be further stumbles along the way especially given the climate change brigade have been stalled whilst we work our way through our current focus. However, that too will provide a god given excuse to increase taxes and especially on the internal combustion engine. Again trust me, "you ain't seen nothing yet" to quote Bachman, Turner, Overdrive! 

 

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17 hours ago, Mossypossy said:

Most I have ever spent on a car in the last 30 years is about £7k. (not a Lexus even)

Agreed, if I was fool enough to part with £40k+ on a car I would deserve to be hammered by the government.

You don’t have to pay £40k to trigger this tax, I didn’t, you can pay well below for a second hand model and still pay the luxury car tax if it’s less than 6 years old, just as you can pay £3500 for a 2007 LS and get clobbered for £600 per year tax, well done for your prudent approach to cars, I am quite happy being a fool!!

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I’m old enough to remember “Purchase Tax”

This was introduced as a “Luxury Tax” on purchases such as a new washing machine or a colour TV which at the time were considered luxury items as you still had the choice of hand washing your clothes or renting your black and white TV set.

Eventually this Tax evolved into VAT but now applied to almost everything purchased, children’s clothes and most food items being the exceptions.

So now you end up paying car tax, VAT and a luxury tax.

Even the Covid travel test kits, which are a legal requirement, are subjected to 20% VAT, I can assure you there is nothing luxurious about sticking a swab down your throat then up your nostrils. 

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