Road tax doubles on many cars

A total of 13 emission 'bands’ have been introduced, with the owners of the highest polluting vehicles paying the most in road tax - and significantly more than before the changes.

An additional one-off 'showroom tax’ will also apply to anyone who wants to buy a new car in one of the most polluting bands. Cars in nine of the 13 bands will incur this tax.

The increases were announced in 2008 but only take force today. Motoring groups said the taxes are an unfair penalty on drivers.

Based on last year’s sales figures, around 1.4 million cars that incur a showroom tax will be sold in 2010/11.

Under the scheme, new cars with the largest emissions will incur a levy of £950 in their first year when the showroom tax and higher road tax bills are combined.

That is more than twice the rate levied on the biggest emitters already on the road.

Smaller cars with low emissions will face no tax in their first year.

The Treasury said the new tax regime would “send a stronger signal to the buyer about the environmental implications of their car purchase”.

But critics said the measures are simply another revenue-raising measure imposed on motorists already hurt by high fuel prices.

The top rate of showroom tax is targeted at high-emitting “supercars”.

Every new car built by Aston Martin, Bentley and Rolls-Royce will face a £950 tax, as will most new Jaguars. So will some Range Rovers and the Vauxhall Insignia 2.8.

At the other end of the scale, new cars with low emissions, including the Audi A3 1.6 TDI and the BMW 316d will pay no road tax in the first year.

According the AA, around 1.44 million cars last year were sold which would be hit by the new showroom tax this year.

Paul Watters, head of public affairs at the AA, warned that the new tax could be the thin end of the wedge

He said: “The problem is that with any new tax, once it is introduced we have crossed a threshold. It’s open then for any Chancellor to increase it. Okay, those paying £950 a year are going to be driving a pretty special breed of car. But they will be already be paying a far higher rate of tax through fuel duty, because these cars consume more petrol.”

As well as the showroom tax, taxes on cars already on the road will also be increased to penalise those with the highest emissions. Low-emission vehicles will be cheaper to tax.

Data from the Society of Motor Manufacturers and Traders (SMMT) suggest that 6.6 million car owners will see the tax on their existing cars increase by well above the rate of inflation.

Any car registered since 2001 that falls into Band I or above will incur higher tax this year.

The Band I tax rate will rise from £175 to £200, a jump of 14 per cent.

Cars falling into that band include the Land Rover Freelander 2.2 diesel, the Toyota Avensis Estate 2.2 and Vauxhall Astra CC.

Band J cars, which include the Nissan Qashqai 2.0 diesel, the Honda CR-V 2.0 petrol and the Vauxhall Corsa 1.6, will incur tax of £235, up from £200.

Paul Everitt of the SMMT said that, with the economy still fragile, ministers should have delayed the tax rise.

He said: “We are disappointed that government didn’t take the opportunity in last week’s Budget to defer the introduction of the first year rate or the increase in standard VED rates.

“Environmental taxes need to be clear and consistent so that motorists can be confident that they will reap the benefits from their decision.”

The Taxpayers’ Alliance said duty rises were “naked money-grabbing dressed up as green taxes.”

Mark Wallace of the alliance said: “After years of painful tax rises, it beggars belief that the Government are punishing drivers again.

“Most people who will be hit by these tax rises are not self-indulgent leisure motorists – they need their cars to get to work and to carry their families.”