A study by CAP Automotive, the car running cost experts, reveals that the cost of taxing some cars that are only 7 years old is now around a third of their total value.

The problem stems from changes to Vehicle Excise Duty bands which were introduced in 2006 to penalise higher CO2 vehicles.

It means that cars registered since March 23 2006, with CO2 emissions between 226 and 255g/km now cost £475 to tax, while cars that emit over 255g/km cost £490 a year.

The danger now, according to CAP, is that such cars could rapidly become worthless in the trade, even though they cause relatively little pollution because older, less economical, vehicles tend to be driven less.

CAP believes that lowering VED rates for the top 2 CO2 brackets after a certain age, would prevent the scrapping of well-maintained vehicles with many years of serviceable life remaining.

Car running costs expert Mark Norman, of CAP, highlights the issue by pointing to examples of higher CO2 vehicles which now cost between 28% and 34% of their total value just to tax for a year.

He said: “We are now in the crazy situation where perfectly good cars have become uneconomical to own because the cost of taxing them could soon approach half their car’s value.

“This means more and more cars will become unsalable and will have to be scrapped long before the end of their useful life.

“Scrapping serviceable cars for the sake of a tax disc makes a mockery of environmental taxes as owners already tend to limit their mileage because the cars are relatively uneconomical. Throw in the carbon footprint of building the cars that replace those that are scrapped and the environmental justification for taxing these cars off the road collapses.

“The Government should now consider lowering VED rates for cars that fall into the brackets L and M after a certain age. This would prevent this potential waste of vehicles that do relatively little harm to the environment but provide cheap and comfortable transport for thousands of hard-pressed motorists in austerity Britain.”
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Taxed off the road? Five examples of 7-year-old cars which are rapidly becoming uneconomical to tax. They are valued as cars that were registered in June 2006, now with 70,000 miles on the clock. CAP Clean is the recognised benchmark trade value of used cars in Britain.