Cars written off by street tax: VED hikes go away well-liked 2000s fashions too pricey to run and unattainable to promote

Popular cars that are less than 20 years old are being rendered uneconomical to run by Labour’s ongoing road tax hikes.

This has led to a surge in cars being scrapped, despite being perfectly roadworthy and capable of offering hard-up households years of reliable and affordable motoring.

A toxic combination of outdated rules on vehicle excise duty (VED) – commonly known as road or car tax – and persistent rate increases to bolster Treasury coffers is forcing thousands of older motors off the road unnecessarily, because their annual running costs are higher than their value.

And it comes at a time when Britons are desperate to hold onto their cars for longer.

Tightening household budgets – which will constrict further as the conflict in the Middle East continues – and people refusing to switch to EVs and tech-laden modern cars has meant motors on our roads are generally older than ever.

The average age of cars in the UK is nearly ten years, according to analysis by the RAC Foundation. This is up from an average of just seven years a decade earlier.

But Rachel Reeves’ ratcheting up of VED rates – the latest car tax increases arriving on Wednesday 1 April – means some of the most useful and desirable older cars from the early 2000s are now virtually worthless and being destroyed in accelerating numbers.

Even cherished hot hatches are becoming unsellable because motorists are unwilling to pay the annual £760 to £790 tax bill to continue using them. 

Controversial rules implemented in April 2006 saw the introduction of two higher tax bands for cars producing more than 225 grams of CO2 emissions per kilometre.

The intention was to penalise gas guzzling ‘Chelsea tractor’ SUVs, which were gaining popularity amidst concerns about their impact on the environment.

But the policy also lassoed a selection of popular large family cars, as well as some high-performance – but affordable – models.

Despite new VED bands and rules coming into force a decade later for cars registered after April 2017, any motor that first hit the road in the 2000s is still taxed by the older system.

And levies on cars of this generation are being increased in-line with RPI annually, despite the vehicles they apply to falling in value, with many now worth hundreds rather than thousands of pounds. 

Reeves’ latest hike to VED  rates from 1 April 2026 means cars registered from 23 March 2006 to 31 March 2017 that sit in VED bands L (226 to 255g/km CO2) and M (over 225g/km CO2) cost £760 and £790 to tax per year respectively.

Contentiously, cars registered before March 2001 – which are often inherently more polluting – are taxed at a two-tier flat rate based on engine size rather than CO2 emissions. 

Pre-March 2001 models with an engine of less than 1,549cc are taxed at £230 a year, while those with a cubic capacity above this – irrespective of whether they are a Skoda or a Lamborghini – charged £375 annually. 

Ten popular models being written off by high car tax 

The Ford Mondeo, a firm favourite of the early 2000s, is among those motors being driven off the road by high car tax – specifically examples with V6 petrol engines. 

More practical family motors snared by the outdated policy include the Ford Galaxy MPV, Land Rover Freelander 2 SUV and Jaguar X-Type saloon.

As too are collectable modern classics like the second-generation Audi TT, Volkswagen Golf R32 and Saab 9-3 Convertible V6.

Others affected include the quirky Chrysler PT Cruiser, robust Subaru Forester and sporty Vauxhall Zafira VXR.

Owners of these older cars typically fall into one of two groups: cash-strapped families who can’t afford to replace them with newer models and enthusiasts who collect and treasure them. 

For the former, the cost to tax these cars is now higher than their vehicles are usually worth.

If they can’t stump up the full annual VED amount, the government does provide a monthly payment solution to spread the cost.

But this comes with a surcharge. 

Paying 12 direct debit installments triggers a 5 per cent premium, taking the yearly cost to an eye-watering £798 and £829.50 for the respective tax bands L and M.

Such astronomical repeat costs have made these cars both unaffordable to run and almost impossible to sell.

Many low-income households have also been caught out buying what they thought to be cheap cars without understanding the taxation sting that comes with them.

And when they do realise the sizable tax hit, finding a buyer for such cars is proving to be a near impossible task. 

William Fletcher, CEO of Car.co.uk, said: ‘Many of these cars, from family staples like the Ford Galaxy and Vauxhall Zafira to sportier models like the Volkswagen Golf R32, are now worth less than their annual tax bill. 

‘It’s hard to believe, but these models are being taxed on UK roads at the same rate as luxury sports cars worth 100 times their value.

‘For many households that require affordable and family-sized cars like the Galaxy, April’s road tax changes present a massive problem. 

‘Right now, amid the UK’s affordability crisis, many families in the UK are simply trying to make ends meet, so paying hundreds in road tax on an ageing vehicle is simply unviable and makes no financial sense.’

Steve Gooding, director of the RAC Foundation, said the modern design and advances in build-quality means these cars are ‘looking good’ and ‘running reliably’ for longer.

‘The days of them rusting away before your eyes are well and truly behind us.

‘Even a twenty-year-old car with a full service-history can be a good bet for someone seeking a bargain buy that still looks up to date,’ he explains.

But Fletcher says scrappage records show that cars of this age are being sent to scrapyards in rapidly accelerating numbers because they are no longer affordable to own and proving difficult to sell.

For instance, scrapping of Land Rover Freelanders has increased by 550 per cent between 2024 and 2025.

Even the VW Golf R32, considered one of the greatest hot hatches of its era, saw a 125 per cent spike in scrappages in the previous 12 months, Cars.co.uk said.

Ministers will argue that the rules are having the desired effect by removing older polluting cars from our roads.

But it is the impact this is having on the poorest households – many of whom are reliant on having a dependable but inexpensive car – that is of greatest concern.