Officially called the voluntary discount scheme, the scrappage scheme means you can get £2,000 towards a new vehicle when you trade your old car or van for scrap. Half of this moneywill come from the Government, with the remaining £1,000 funded by vehicle manufacturers.

The car industry has been hit particularly hard by the economic downturn, so the scrappage scheme was devised to stimulate car sales. By buying a new car you'll help to support British jobs,manufacturers and suppliers, with the extra benefit of replacing inefficient and dirty vehicles with new, more efficient ones.

Check if your old vehicle qualifies for the scrappage allowance. It should be:

Operating since May 2009, the vehicle discount scheme will continue until the end of February 2010, or as soon as the allocated funding runs out. The Chancellor has set aside £300m to scrap up to 300,000 vehicles.

A wide variety of car manufacturers have signed up to the scrappage scheme. Budget choices include Chevrolet, Hyundai and Suzuki, but if you're spoiling yourself the used car discount can also be used against prestige car brands including Jaguar, Mercedes-Benz and Porsche.

Nice idea, but no. The scrap vehicle must have been registered in your name with the DVLA (or DVA in Northern Ireland) for at least 12 months before the order date of your new one. There should also be a UK address on the registration certificate (V5C).

The UK scrappage scheme doesn't cater for motorbikes, unfortunately. The vehicle you're scrapping must be a car or small van up to 3.5 tonnes. Likewise, you can't trade in your used car for a discount on a new motorcycle.

Like the old vehicle you plan to scrap, the new one must be a car or small van up to 3.5 tonnes. Only UK-specification cars are eligible. It must have been registered in the UK on or after the 18 May 2009 and declared new at first registration with no former keepers.

When you find the new car you want, check the dealer is participating in the vehicle discount scheme. Some manufacturers are currently offering added incentives, so it's worth shopping around.

Once the car salesperson has checked both vehicles meet the criteria, they'll arrange to scrap your old car or van. The discount will appear on the invoice for your new vehicle once it's delivered.