Showroom tax to burden car buyers

04 March 2010

A 'showroom tax' to be introduced in April is set to increase the burden on new cars by up to £300 in the first year, according to research.

The study by Auto Trader advised that the tax hike can be avoided by either purchasing a new model before April 1 or by selecting a car that falls in a lower taxation range.

The new regulations are part of the second stage of taxation based on a vehicle's carbon dioxide emissions.

For instance, a Honda CR-V with 190g/km C02 emissions - which currently costs £210 per year in vehicle excise duty (VED) - will cost £550 for the first year after the regulations are in force.

Matt Thompson, Group Marketing Director at Auto Trader, said: "The Showroom Tax has been brought in over a two-year time span. The time delay means many are unaware of the impending rise in cost.

"But popular cars with lower emissions such as the Mini Cooper and the Ford Fiesta will avoid car tax for the first year thanks to the new system.

"Drivers and eco-friendly motorists who don't want to be stung by the new Showroom Tax, should choose a vehicle from tax-band A. Smart Fortwo Cdi's, the Ford Fiesta ECOnetic and the Volkswagen Polo BlueMotion are among the cars avoiding tax altogether."

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