Over £40k car tax how to avoid/minimise £325 surcharge.

RGBARGEE

Well-Known Member
So here is a question. Sunday challenge !!! One for @Snake Pliskin I reckon.

As we know the nasty duplicitous car hating Government impose an additional tax on cars costing over £40k. I recall having to pay this just because I had a sunroof.

My question is that you have to pay the extra £325 for 5 years DVLA say ' You only have to pay this rate for 5 years (from the second time the vehicle is taxed)..

So in 2 scenarios.

1. New car registered on 1 March 2021 paying First year charges.
2. Tax expires on 28 Feb 2022 - Pay £150+ £325 surcharge (+ any uplifts) Year 1
3. Ditto 2023 -2024 Year 2
4. Ditto 2024-2025 Year 3
5 Ditto 2025-2026 Year 4
6. Ditto 2026- 2027 Year 5 ends 28 Feb 2027

However can I do the following and save 11/12 x £325?

1. New car registered on 1 March 2021 paying First year charges.
2. At end of March 2021 'cash in initial tax' receiving a refund of 11/12 x £150+ £325 surcharge
3. Retax for a Year 1 April to 31 March 2022 (
£150+ £325 surcharge). Year 1
4. Ditto 2022 -2023 Year 2
5. Ditto 2023 -2024Year 3
6. Ditto 2024 -2025 Year 4
7. Ditto 2025 -2026 Year 5 ends 31 March 2026

It also causes an Issue for used car buyers.

What happens to used car buyers where the Year 5 surcharge ends Mid Tax Year? For example Year 5 ends in Say July 2022 but the car has to be re-taxed for a year from 1 June 2022. Surely the Surcharge doesn't apply for 12 months?

This may be a complex conundrum for many but hopefully someone can enlighten us!!
 

Snake Pliskin

Well-Known Member
Supporter
So here is a question. Sunday challenge !!! One for @Snake Pliskin I reckon.

As we know the nasty duplicitous car hating Government impose an additional tax on cars costing over £40k. I recall having to pay this just because I had a sunroof.

My question is that you have to pay the extra £325 for 5 years DVLA say ' You only have to pay this rate for 5 years (from the second time the vehicle is taxed)..

So in 2 scenarios.

1. New car registered on 1 March 2021 paying First year charges.
2. Tax expires on 28 Feb 2022 - Pay £150+ £325 surcharge (+ any uplifts) Year 1
3. Ditto 2023 -2024 Year 2
4. Ditto 2024-2025 Year 3
5 Ditto 2025-2026 Year 4
6. Ditto 2026- 2027 Year 5 ends 28 Feb 2027

However can I do the following and save 11/12 x £325?

1. New car registered on 1 March 2021 paying First year charges.
2. At end of March 2021 'cash in initial tax' receiving a refund of 11/12 x £150+ £325 surcharge
3. Retax for a Year 1 April to 31 March 2022 (
£150+ £325 surcharge). Year 1
4. Ditto 2022 -2023 Year 2
5. Ditto 2023 -2024Year 3
6. Ditto 2024 -2025 Year 4
7. Ditto 2025 -2026 Year 5 ends 31 March 2026

It also causes an Issue for used car buyers.

What happens to used car buyers where the Year 5 surcharge ends Mid Tax Year? For example Year 5 ends in Say July 2022 but the car has to be re-taxed for a year from 1 June 2022. Surely the Surcharge doesn't apply for 12 months?

This may be a complex conundrum for many but hopefully someone can enlighten us!!


I think it will be pro-rata mate for the 5th & final year dependent on how many months left to run in the higher bracket .... unless the Government are conning ******** & charge you full whack regardless !
 

RGBARGEE

Well-Known Member
I think it will be pro-rata mate for the 5th & final year dependent on how many months left to run in the higher bracket .... unless the Government are conning ******** & charge you full whack regardless !
What about cashing in after month one on new car, retaxing for a year and potentially saving 11 months surcharge??
 

Snake Pliskin

Well-Known Member
Supporter
What about cashing in after month one on new car, retaxing for a year and potentially saving 11 months surcharge??

I think you’ll get what’s owed back but if you re-tax it will incorporate any months within the 5 year period at the supplement pro-rata ... I just can’t see the Government letting it slip
 

RGBARGEE

Well-Known Member
I think you’ll get what’s owed back but if you re-tax it will incorporate any months within the 5 year period at the supplement pro-rata ... I just can’t see the Government letting it slip
Well , we shall see. The Government seem pretty incompetent so who knows!
 

Adam14

Registered User
Sounds like a lot of effort just to save £3-400, I'd be surprised if the government haven't thought about this given the intricate tax rules throughout the tax system.

Sent from my HD1913 using Tapatalk
 

RGBARGEE

Well-Known Member
Sounds like a lot of effort just to save £3-400, I'd be surprised if the government haven't thought about this given the intricate tax rules throughout the tax system.

Sent from my HD1913 using Tapatalk

I'm only asking the question as it seems like a loophole!

It's dead easy to cancel car tax one evening and reignite the following morning.
A 10 minute job is not a lot of effort to save 11/12 x£325 . £300 for 10 minutes work.
Equivalent to a weekly pay packet of over £66,000!! Enough to buy 52 RS4's in a year!!
 

RGBARGEE

Well-Known Member
@RGBARGEE - I think its like going to be pro-rata as mentioned by @Snake Pliskin

One would 'think so' however the DVLA www states....

Vehicles with a list price of more than £40,000
You have to pay an extra £325 a year if you have a car or motorhome with a ‘list price’ (the published price before any discounts) of more than £40,000. You do not have to pay this if you have a zero emission vehicle.

You only have to pay this rate for 5 years (from the second time the vehicle is taxed).

So my question is essentially ' if a new vehicle is taxed for the second time after cashing in first tax after one month' does this mean that you can avoid 11 months surcharge? So Register 1 March, cash in on 31 March, tax for the second time from 1 April. Might sound petty but a saving for the first (or subsequent owner of c£300 for 10 minutes work.

D0es anyone know for sure, as one would expect so is a good response if not actually a definitive answer.
 

terminator x

Registered User
See how the £40k never increases so year after year it drags in more cars! Also rrp based and surely hardly anyone pays that.

How can you just cancel the Ved though? Sorn for one day?

TX.

Sent from my BBB100-2 using Tapatalk
 

RGBARGEE

Well-Known Member
See how the £40k never increases so year after year it drags in more cars! Also rrp based and surely hardly anyone pays that.

How can you just cancel the Ved though? Sorn for one day?

TX.

Sent from my BBB100-2 using Tapatalk
On the evening of the 31 March you can I believe SORN the car and on 1 April take out a new period of tax.
£40k is hardly luxury motoring these days, just another way our duplicitous Government steal our money to give to their mates!
 

voorhees

Moderator
Staff member
Moderator
My dealings with the DVLA tells me that they would not have latched onto this but then again they did charge me to retain my plate when some Herbert robbed my car and I was unable to use the plate in case an ANPR picks the plate up !
Then contacted me when the car was found and being put back on the road...asking if it was still mine :sour::sour::sour:
 

Bristle Hound

Moderator
Staff member
Moderator
On the evening of the 31 March you can I believe SORN the car and on 1 April take out a new period of tax.
£40k is hardly luxury motoring these days, just another way our duplicitous Government steal our money to give to their mates!
@RGBARGEE - Having sorn'ed my X3 at the end of November, DVLA say not to re-tax the car for 6 days once done
I'll be keeping my X3 beyond the 5 years so if you can wait that long I'll let you know what happens lol (Only 3 years 9 months to go)
 

RGBARGEE

Well-Known Member
@RGBARGEE - Having sorn'ed my X3 at the end of November, DVLA say not to re-tax the car for 6 days once done
I'll be keeping my X3 beyond the 5 years so if you can wait that long I'll let you know what happens lol (Only 3 years 9 months to go)
That may not work as I think you need to sorn after first month if this ‘scam’ is to work. I would be happy not using a car for 6 days to save £300. Currently waiting until 1 March to register new car to potentially save £3250 in 3 years time (projected increased value of a 21/21 versus a 21/70 .)
 

Paulbean

Registered User
Well, on this subject, mine was a pre-registered car and the garage had paid for the first year (I think somewhere up around a grand).

I bought the car at a few weeks old and only paid the 2nd year rate, no addition of any pro-rata "showroom" tax.
 

RGBARGEE

Well-Known Member
Well, on this subject, mine was a pre-registered car and the garage had paid for the first year (I think somewhere up around a grand).

I bought the car at a few weeks old and only paid the 2nd year rate, no addition of any pro-rata "showroom" tax.
That’s interesting. Do we take from that the 5 year clock starts ticking from your ‘second’ taxation? So 5 years and a few weeks rather than 6 years. I suppose the acid test would be to find out if the garage got a pro rata refund of the whole amount £150+ £325...
 

Paulbean

Registered User
That’s interesting. Do we take from that the 5 year clock starts ticking from your ‘second’ taxation? So 5 years and a few weeks rather than 6 years. I suppose the acid test would be to find out if the garage got a pro rata refund of the whole amount £150+ £325...

It's a little more than that for the first year, closer to £1300, one of the reasons I went for a pre-reg'd car albeit with only 10 miles on it...and, sorry, I haven't a clue if they received a pro-rated refund.
 

RGBARGEE

Well-Known Member
Think my Targa 4S being registered in 1 March is nearer £2k hence my question
 

wideboybloke

Registered User
I don’t have an answer to the problem, but I’m posting to register my irritation and frustration at the road tax surcharge as I have come up against it recently. Somebody said above that you don’t get that much for £40K these days and it would be very cynical of the government to freeze the threshold at that level, as they could do.

I’ve been looking at ex-demonstrator examples of the model I’m after and the discount from new price is significant. The list price for the unadorned model new is £37K but because these are ex-demonstrators and have several optional extras, they tip over the £40K and hence are caught. However, one is on offer for £25995 with 1115 miles on the clock and the other, which has a pano so roof to boot, is £26995 with 3500 miles covered. The first was registered in September 2020 and the second in July 2020. That is one hell of a discount on the new price for a nearly new car, but then you get stung for the road tax surcharge.

You could take the view that what you are saving on the new price will offset the surcharge and there is still a substantial saving on the new price even allowing for that. The ironic thing is that in reality the new price would probably be under £40K after the usual haggling, but you still get stung for the surcharge
 

RGBARGEE

Well-Known Member
Discount on new is huge and likely to be similar to demo prices. Dealer used to do me a better deal on new audi rather than buying demo. In 2018 there was a circa £4500 Audi contribution on S3 with c10% discount on top. Think my £43k ended up at £34k sold 2.5 years later for £30k. Brexit and the Covid situation plus uncertain economy has created shortage of new expensive cars and used values are high.
 

Ron240

Breaking the stereotype
I have probably not followed the finer points of what is being asked here...because the subject can be a little confusing.
Regarding refunds when cancelling within the first year after registration you are only entitled to a pro rata refund based on the standard rate (currently £150). There is no additional rate in the first year because it is purely emissions based and incoporated into the on the road price, which it is often much more expensive.
When the vehicle is retaxed it will be at the full standard + additional rate (currently £150 + £325).
 
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RGBARGEE

Well-Known Member
I have probably not followed the finer points of what is being asked here...because the subject can be a little confusing.
Regarding refunds when cancelling within the first year after registration you are only entitled to a pro rata refund based on the standard rate (currently £150). There is no additional rate in the first year because it is purely emissions based and incoporated into the on the road price.
When the vehicle is retaxed it will be at the full standard + additional rate (currently £150 + £325).
There are 3 taxes in year 1. Registration Tax 2 Standard rate and 3 over 40k surcharge.
If cashing in the only bit you don’t get back pro rata is the initial Registration Tax.
 

Ron240

Breaking the stereotype
There are 3 taxes in year 1. Registration Tax 2 Standard rate and 3 over 40k surcharge.
If cashing in the only bit you don’t get back pro rata is the initial Registration Tax.
I think you are getting confused.
There is no over £40k additional rate when first registered, this only applies from the first renewal onwards.
The first tax from new is purely emissions based, but if you cancel you only get a pro rata refund based on the standard rate which is currently £150.
Trust me, i have done it. :)
 

RGBARGEE

Well-Known Member
I think you are getting confused.
There is no over £40k additional rate when first registered, this only applies from the first renewal onwards.
The first tax from new is purely emissions based, but if you cancel you only get a pro rata refund based on the standard rate which is currently £150.
Trust me, i have done it. :)
Thanks for that clarification. I was wondering initially what happened with the 5 year £40k tax which applies after the initial tax IF you cash in after 3 months from new. Is it 5 years from 'first renewal' at 3 months old or 9 months at Standard Rate (no supplement fro £40k +) and then 5 years extra from 1st birthday.
 

Ron240

Breaking the stereotype
Thanks for that clarification. I was wondering initially what happened with the 5 year £40k tax which applies after the initial tax IF you cash in after 3 months from new. Is it 5 years from 'first renewal' at 3 months old or 9 months at Standard Rate (no supplement fro £40k +) and then 5 years extra from 1st birthday.
This is an interesting point and one I am not quite clear on, because all the examples are based on full years from new.
My own interpretation would be that the additional rate is in force until the day before the vehicle has its 6th birthday as it were(calculated from first registration), so if being retaxed within 1 year of this date the additional rate will be calculated pro rata.
This can certainly be a confusing subject. :anguished:
 

RGBARGEE

Well-Known Member
This is an interesting point and one I am not quite clear on, because all the examples are based on full years from new.
My own interpretation would be that the additional rate is in force until the day before the vehicle has its 6th birthday as it were(calculated from first registration), so if being retaxed within 1 year of this date the additional rate will be calculated pro rata.
This can certainly be a confusing subject. :anguished:
It is confusing, I wondered initially if buying a keeper as I am on 1 March if this could reduce the period of having to pay the £40k supplement by cashing in and retaxing, but actually if the prorated refund doesn’t include the £325 it’s probably pointless. Think I will seek some more excitement this afternoon Cheers
 

Frizzley

Registered User
I think you are getting confused.
There is no over £40k additional rate when first registered, this only applies from the first renewal onwards.
The first tax from new is purely emissions based, but if you cancel you only get a pro rata refund based on the standard rate which is currently £150.
Trust me, i have done it. :)

I recently changed my TTRS (bought brand new) after 9 months and the DVLA refunded me £118. 75 I.e. 25% of the full £475, not just the standard rate.

Cars V5 confirms month when additional tax ceases - should be the end of the first full month 5 years after the car was initially registered.

More than likely if the dates don’t align to the 5year anniversary rates will be pro rated to avoid creating loads of schemes to avoid paying extra tax.
 
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Ron240

Breaking the stereotype
@Frizzley Yes I agree with what you said. :)
It is easy to get confused on this and I have confused first year tax with what will be refunded.
When I done it my car was also 9 months old but it did not cost over £40k new so I was refunded pro rata on the standard £150 but not the £800 + that it cost to tax in the first year (included in on the road price).

If you check on DVLA site for road tax and put in the registration number it will state "Additional Rate applicable until" then give the exact date that it expires.
 
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