Buy new car now or choose pre-reg to beat VED changes, says Simon Gray, managing director of Credo Asset Finance.

Warning! Government car tax changes could be detrimental to your wealth!

It is probably a little-known fact that, with effect from April 1, the Department for Transport is introducing substantial changes to vehicle excise duty (VED) or car tax as we all know it.

According to the government, with the outgoing car tax system most new car buyers were paying very little or nothing in the way of car tax which, as a result, has been costing the government millions of pounds each year.

While most people will think that it's just an increase in the amount people pay every year, there is more to it than that.

Firstly, the current car tax scheme is based on carbon dioxide (CO2) emissions – the more emissions from your car the more you pay. However, the new scheme will stay based on the same principle but only completely zero-emission cars, such as the electric BMW i3 and Nissan Leaf, will be exempt from paying anything at all.

Currently, low-emission cars, for example the Ford Fiesta or Skoda Fabia, are tax exempt but the change will see these cars having to pay a substantial amount. At the moment the Ford Fiesta 1.0 Zetec is completely free, but if a new car is purchased from April 1 the owner will have to pay £120 in the first year and £140 a year after that.

Not only will there be an increase in the yearly tax one pays but there will also be an added premium for cars that have a list price of more than £40,000. Owners of these cars will have to pay an extra £310 a year for five years regardless of their emissions. This is bad news for anyone wanting to buy a Tesla Model S. Being all-electric, this emission-free car comes tax-free but, because it has a list price of more than £40,000, the £310 premium every year will have to be paid.

So, how can I avoid the increase in car tax? Well, the simple answer is if you're looking to buy a new car, then make sure you buy it before April 1. One way to avoid the new tax increase would be to look at finance options and, at Credo, we can offer low-rate finance and also help you to spread the cost on a monthly basis.

The used car market is also another good option. A lot of cars on the used market aren't actually used, they're called 'pre-reg' as it has already been registered by the manufacturer. So, even though the car may be six months old it will have likely done a few hundred miles and be virtually brand new.

Article sponsored by Credo Asset Finance, 85 Yarmouth Road, Norwich, NR7 0HF.

Phone – 01603 703180

Email – sales@credoassetfinance.com

Website – www.credoassetfinance.com

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