Motorists braced for 'showroom tax'

Motorists are set to start paying a new "showroom tax" on their vehicle purchases.

Those buying the most-polluting cars will have to pay a higher vehicle excise duty (VED) for the first year. This means that a person purchasing a car emitting more than 255g of CO2 per one kilometre will end up paying £950 for the first year.

On the other hand, those buying vehicles emitting less than 130g/km do not have to pay any VED in the first 12 months.

For cars emitting above 130kg/km of CO2, the VED will vary and new standard rates will be applicable after the first year.

The VED rate for the first year for cars emitting 121-130g/km - which currently constitute around 7.2% of the new car market based on 2009 - will be up to £120 on current rates, or £90 on the new increased rates.

The most polluting cars - forming just 1.5% of the cars - will pay £545 more in the first year and an extra £30 for each following year.

The most popular band, made up of 19.7% of the market, will be the cars emitting 131-140g/km that will cost them an additional £110 in the first year.

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