Home Business NewsBusinessAutomotive News Want to beat the ULEZ? Join the circus

Want to beat the ULEZ? Join the circus

by LLB Finance Reporter
15th Sep 23 10:30 am

The cost of keeping our cars on the road has increased by 27% in the last year alone, that’s £256 more spent by the average motorist, with the annual cost now sitting at £1,200.

That’s according to analysis by finance experts, RIFT, but while the recently expanded ULEZ has only added to this financial misery for many motorists, RIFT’s research also shows that those using their car for professional purposes can offset Sadiq’s latest tax grab against their tax bill, with an increase in fuel advisory rates also allowing them to claim back thousands in fuel costs.

Car Costs up 27% Annually

Keeping a car can be costly and the analysis by RIFT shows that this cost has climbed substantially over the last year. The average cost to keep a car on the road – including an MOT, service, insurance and road tax – currently sits at £1,200. This cost has increased by 27% in the last year alone, meaning the average motorist is now paying £256 more a year.

Car insurance costs have contributed to this increase to the greatest extent, up 40% annually. At the same time, the Admiral Group’s half year financial results show that they have recorded a healthy year on year increase in insurance revenues, no doubt driven by the increased cost incurred by the consumer.

Tips to keep your car insurance costs down: –

  • With more of us working from home, the number of miles we cover a year has reduced. This is one small detail that many motorists forget to tell their insurance provider and doing so could cut the cost of your premium.
  • If you are now working from home and no longer use your car for work purposes, changing your policy from a business policy to a social one will help cut costs.
  • You may think that keeping your car in a garage will reduce your premium as it adds an additional level of security. However, it can actually increase your insurance costs as a high number of bumps and scrapes come from drivers attempting to park in the more confined space.
  • Always, always shop around. It may seem tiresome but the chances are you will find a provider willing to insure you for a lower cost.
  • Always ring directly. Many insurers today specifically state they will not negotiate on renewal offers. A phone call could prove otherwise as they are far more likely to offer a reduced rate over the phone.

The increase in car insurance is followed by the cost of a service (+10%) and road tax (+9%), with the price of an MOT seeing the most marginal uplift at 2%.

ULEZ Misery for Motorists

For thousands of motorists, the recently expanded ULEZ will have only added a further financial strain to the cost of running their car on a day to day basis. The charge of £12.50 per day applies to any car that isn’t ULEZ exempt up to and including 3.5 tonnes, or 5 tonnes for mini buses.

It’s thought that there are some 700,000 cars across London that don’t meet ULEZ emission standards. That’s a potential tax grab of £8.75m per day should they all hit the road and, for the average person using a non-ULEZ compliant car for business purposes, the £12.50 charge amounts to £3,250 over the course of the working year (260 days).

How to beat the ULEZ

There are some ways you can beat the ULEZ charge. For example, classic cars built before 1982 which are tax exempt are also ULEZ exempt. This cut-off date also rolls forward so by 2025 you can purchase a pre-1985 motor and it will be ULEZ exempt.

Agricultural and military vehicles are exempt, as are cranes, meaning you could commute in a tank, tractor or crane and not have to pay the ULEZ charge.

Failing that, you could join the circus. Anyone driving a specifically constructed or modified ‘showman’s vehicle’ used for a performance, or to haul performance equipment is exempt.

However, the most realistic way for many motorists to forgo the ULEZ is if they are self-employed. While you still need to pay the tax upfront, you can claim it back through your tax bill if the journey was ‘an exceptional trip solely for business’.

Advisory Fuel Rate Increase

It’s not just the cost of the ULEZ that self-employed motorists can claim back, there are also advisory fuel rates that allow them to be compensated, usually when using a company car.

The good news is that as of the 1st September, these rates have increased for many motorists. Petrol cars between 1401cc and 2000cc can now claim £0.16 per mile, an increase of £0.01. Petrol cars over 2000cc have seen a £0.02 increase, allowing them to now claim £0.25p per mile. While diesel drivers over 2000c have also seen a £0.01 uplift, allowing them to claim £0.19 per mile.

This means motorists in petrol cars between 1401cc and 2000c can claim an average of £2,650 back per year. Those driving cars with an engine greater than 2000cc can claim an average of £4,140 per year. While drivers with a diesel engine larger than 2000cc can claim £3,146 per year.

Bradley Post, MD of RIFT, said, “For a great many people, our cars are vital to our professional lives and so while it’s often the most expensive outgoing we may have, it’s a necessary one. But with the cost of living crisis continuing to strain household finances, a steep hike in the cost of keeping our cars on the road is the last thing anyone will have wanted to endure this year.

To add to this, hundreds of thousands of motorists within the M25 are now subject to the additional cost of paying the ULEZ charge and for those using their car on a regular basis, this cost amounts to thousands of pounds a year.

However, while a classic car, tank or circus vehicle may not be a viable option, you can offset this additional cost against your tax return when using a non-ULEZ compliant car for work purposes.

What’s more, advisory fuel rates have increased this month, meaning that the sum you may be eligible to claim when using your vehicle for work purposes has also increased.”

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