Why is this clean hybrid car taxed at almost the same rate as a Ferrari?

A retired bishop who replaced a polluting diesel car with a much greener plug-in hybrid model has described the government’s environmental policies as “completely mad” after his road tax rose from zero to £480 a year.

The Rev Robert Paterson, who lives near Evesham in Worcestershire, was hit with the bill after switching to a secondhand BMW 330e plug-in hybrid electric vehicle (PHEV), which claims a maximum fuel economy of 200 miles per gallon, and emits only 32g of CO₂ per km, according to its official rating. It cost about £33,000.

The ageing 2014 diesel-powered VW Golf that the BMW replaced – a car that will soon be deemed too polluting to be driven in London without incurring an extra £12.50-a-day charge – attracted no road tax.

Paterson’s new car has fallen foul of a 2017 change in the tax regime that brought in a higher charge on vehicles costing more than £40,000 when new. It affects many plug-in hybrids as they are more expensive to manufacture. This means owners face a £335-a-year tax surcharge for five years from the second year of ownership, whether they are ultra-low CO₂ emitting or gas-guzzling sports cars.

“I have chosen to drive relatively ‘green’ cars for 20 years. Although my Golf was considered green when I bought it, it is less so now,” Paterson says.

“The BMW been a revelation, particularly in the way that it adapts to town use, often producing no emissions at all. Since I last refuelled six weeks ago, it has covered 300 miles on electric-only mode, and it uses very little petrol.”

His £480 a year is just £10 less than he would pay if he had bought a Ferrari of the same age. Only 100% electric cars are still tax free.

The AA has called for reforms to a regime that its president, Edmund King, describes as “perverse”.

A government consultation on vehicle excise duty, launched in March last year, noted that the 2017 rules particularly affected secondhand car sales, “where the incentive for buyers to choose lower-emitting cars is reduced”, and called for views on whether the system should be changed.

“We have repeatedly urged the Treasury to reconsider this position and, while there has been the recent consultation, they still haven’t published the findings,” says King.

“Rather than providing incentives and encouraging motorists to get into cleaner, less-polluting cars, the current tax regime is forcing higher bills on some who choose greener cars. It is a bit of a mess.”

His £480 a year is only £10 less than he would pay if he had bought a Ferrari of the same age

What particularly frustrates Paterson is that if he had bought a conventional petrol or diesel BMW, with a lower initial list price, he would be paying £155 a year to tax the car after the first year – despite it producing far more carbon, and doing fewer miles per gallon.

“The whole thing is completely mad and needs changing urgently,” Paterson says. “Until batteries get more effective, PHEVs are a sensible way forward for many, so why are their owners being penalised in this way, while more polluting cars go scot-free? What am I missing here?”

The Treasury says: “Hybrid vehicles are an important technology in reducing emissions and our reformed vehicle excise duty system seeks to reflect this while offering the greatest incentives to zero-emission vehicles and ensuring the sustainability of public finances over the longer term.

“In the current system, all vehicles over £40,000, other than zero-emission cars, have to pay an additional expensive car supplement – those who can afford the most expensive cars bear a bigger burden.”

Last month, Boris Johnson’s climate spokesperson Allegra Stratton caused some consternation when she revealed that she “didn’t fancy” switching to an electric car as her thirdhand diesel VW Golf “suited her much better”.