Three tips to save on your next car as major tax changes introduced

In light of the significant changes to car tax starting from today (April 1), a motor expert has stepped forward with three top tips to help buyers bag savings on their next vehicle acquisition.

The introduction of the new taxation laws has left numerous people perplexed, with many expressing concerns online about escalating expenses.

Josh Halt, an account manager at Motorfinity, which provides car discounts to frontline service workers, has answered pressing queries regarding the fresh tax rules – clarifying who could be affected and the rationale behind the changes.

This comes at a time when Vehicle Excise Duty (VED) rates are also seeing substantial alterations, anticipated to affect the pricing of all new vehicles purchased going forward.

Below you will find his advice aimed at ensuring maximum savings on your forthcoming car investment.

What do the changes mean if I’m planning to buy a new car after April 1?

If you’ve had your eye on a set of wheels before April 1 but are planning to make the purchase afterwards, Josh suggests that drivers reassess if it’s still an affordable option within their means.

He says: “If you’re uncertain, always collaborate with your car dealer or broker to find a different car or finance deal that fits your current financial circumstances.”

With the tax hike, where can potential buyers save money on a new car?

When venturing into the car market, becoming too attached to a specific make or model isn’t advisable, says Josh.

He advises: “The market is brimming with new models and emerging brands offering competitive prices. So, make sure you explore both well-known and lesser-known brands to secure the best deal. You might find something unexpected that suits your needs perfectly.”

Furthermore, it’s worth investigating if you qualify for any industry-specific discounts. For instance, Motorfinity’s eligible customers, including NHS workers, police, fire and ambulance services, residential social care staff, and armed forces personnel, save an average of £7,000 when purchasing through them.

Consequently, even with rising prices, these discounts can help stretch your budget further when buying your next new car.

Josh also recommended that drivers check with their HR department or search online to see if they’re eligible for any such discounts.

Additionally, Josh advised drivers to examine aspects such as their car insurance to keep the overall purchase price down. He stated: “Opting for a ‘black box’ policy can yield significant savings.

“These savings are particularly noticeable on smaller city cars, which typically see the greatest percentage reductions of 30-50%. This is because they are well-suited to demonstrating the careful driving habits that black boxes reward, such as gentle acceleration and moderate speeds.

“However, with a good road history and careful driving, most people will benefit from lower premiums.”

What does Vehicle Excise Duty (VED) fund?

Josh explains: “Much like your council tax supports local community services like bin collections and street lighting, VED tax contributes to the maintenance of the roads we drive on.”

Is VED the same as road tax?

Actually, they’re not the same. VED is a one-off payment made when you purchase a brand-new vehicle, covering your first year on the road.

Beyond that initial period, road tax becomes a recurring annual expense.

Josh adds: “Your road tax is likely to increase every year in line with inflation, so this is normal. However, the VED increase this April is quite a substantial change, so it’s worth being aware of it and exploring the options available to you to keep your motoring costs down.”

How much will the VED increase in April?

The heftiest rise will hit those buying new petrol, diesel, or other Internal Combustion Engine (ICE) vehicles emitting more than 76 g/km CO2.

In a groundbreaking shift, even purchasers of electric and other low-emission cars will now face the first-year tax, marking an end to their exemption. Additionally, the £10 discount once offered to hybrid vehicles has been discontinued.

For details on the VED rates applicable to new cars from 1 April 2025, consult the government’s official website.

Could you shed light on the Expensive Car Supplement (ECS) fee and its upcoming changes?

What is the Expensive Car Supplement (ECS) fee and how has it altered?

On top of VED, owners of cars valued at over £40,000 must pay an additional charge annually for five years after the car’s registration.

From April, this will see a rise of £70, escalating from £355 to £425 annually. Electric vehicles, which were previously exempt, will now also be subject to this rate.