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New showroom tax to hit car buyers

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The Government is set to introduce a 'showroom tax' in April, increasing the burden on new car buyers already paying for other costs such as car insurance.

Set to be enforced from April 1, the levy will impose an additional tax burden of more than £300 in the first year on the worst-hit models, according to research by Autotrader.

It is the second stage of taxation based on a vehicle's carbon emissions.

Buyers can avoid paying the new tax if they purchase their vehicle before April 1 or choose a car in a lower taxation band.

Matt Thompson, Autotrader's group marketing director, said: "Following its introduction in the 2008 budget, the Showroom Tax has been brought in over a two-year time span. The time delay means many potential buyers are unaware of the impending rise in cost."

Owners of a Honda CR-V with 190g/km CO2 emissions currently pay £210 a year in vehicle excise duty (VED), but those buying the model after April 1 will have to shell out £550 for the first year.

But Mr Thompson added that popular cars with lower emissions like the Mini Cooper and the Ford Fiesta will avoid the tax in the first year, while the Ford Fiesta ECOnetic and the Volkswagen Polo BlueMotion are among those which will avoid it altogether.

© Press Association 2010