Showroom Tax And Increased VED Rates From April 1

If you’re thinking of buying a new car from tomorrow (April 1st 2010) I’m sure you’ll be pleased to know that you’ll be helping to pay off some of the enormous budget deficit. The new car showroom tax takes effect tomorrow so anyone who buys a new car will pay Mr. Darling a one-off fee that varies depending on the emissions of the car. There’s also a restructuring of VED bands that will see owners of less polluting cars pay less for road tax, while the bigger engined cars will cost more.

Car Showroom Tax

The one-off rate will apply to all new cars for the first year of registration. Cars emitting less than 130g CO2/km will be exempt from VED charges for the first year with rates between £110 for cars emitting 131-140g CO2/km to £950 for cars emitting more than 255g CO2/km. Motorists will pay the first year rate of VED when buying their car, reverting to the new standard rate for every subsequent year.

For cars emitting 121-130g CO2/km this equates 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 upper 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 band.

If you use figures for 2009 the most popular band was for cars emitting 131-140g CO2/km, that accounted for 19.7% of the market. Under the new struxture this will work out as an additional £110 charge for anyone buying a car in this band.

So how does this affect hot hatch buyers? Well, a Ford Focus RS will now cost you more for your tax disc (up from £215 to £245) while the showroom tax will cost you an additional £550 (ouch!). A new Golf GTI will cost £180 to tax for the first year (up from £175) while the showroom tax will set you back another £250. Meanwhile, a cheeky little Abarth 500 will cost £155 to tax (up £5) and another £155 to meet that extra showroom tax.

VED rates for cars registered from March 2001
New bandCO2 g/kmStandard rate*First year rate
AUp to 100£0£0£0
MOver 255£405£435£950

First year rates (from 1 April 2010):

  • The first year rate will be applied to all new cars. This is a one-off payment with no additional charges.
  • Motorists with vehicles in bands A – D (0 – 130g CO2/km) will pay nothing in the first year, reverting to their respective band’s rate from the second year onwards.
  • Motorists with vehicles in bands E – G (131 – 165g CO2/km) will pay the same rate in the first year as they do in each subsequent year.
  • Motorists with vehicles in bands H – M (166g CO2/km upwards) will pay a higher rate in the first year, reverting to a lower VED rate from the second year onwards.

VED rates (from 1 April 2010 in the second year of new car ownership)

  • Motorists with vehicles in band A will continue to pay £0.
  • Motorists with vehicles in bands B – E will see a decrease in their VED rate compared with 2009.
  • Motorists with vehicles in band F will see their VED rate remain unchanged from 2009.
  • Motorists with vehicles in bands G – M will see an increase in their VED rate compared with 2009.

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Author: Chris Auty

Voted the Breakthrough Blogger of 2013 by SEAT and the Guild of Motoring Writers , Chris has lived and breathed cars since he was old enough to say 'faster'. With a penchant for hot hatches and an allergy to public transport, he would much prefer to drive a bad car than never drive at all. Fortunately his family has learned to put up with this obsession and the internet has provided a channel for his ramblings.

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