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Motorists hit with new showroom tax

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An additional "showroom tax" for buyers of the most polluting new cars has now taken effect.

The added burden means motorists will have to look for savings elsewhere, such as finding the cheapest car insurance deals.

Under the new regulations, models with the highest emission rates will be hit with increased vehicle excise duty (VED) in the first year.

For example, VED for cars emitting more than 255g of CO2 per one kilometre will be £950 for the first year.

However, those who buy vehicles with emission rates of less than 130g/km will not need to pay VED in the first 12 months. For cars with higher emissions than this, VED will vary in the first year and then return to new standard rates.

For cars emitting 121-130g/km, the VED changes equate to a first-year reduction of up to £120 on current rates, or £90 on the new increased rates.

Based on the 2009 market, this will apply to approximately 7.2% of the new car market with the reduction encouraging sales of the lowest-emitting models.

At the top-polluting end of the market, the first-year rate equates to a £545 increase for the first year and a £30 increase for each subsequent year. Just 1.5% of cars registered in 2009 would fall into this VED band.

© Press Association 2010