The Government will introduce its ‘first year’ Vehicle Excise Duty (VED) 1 April 2010.
The tax, also dubbed the ‘Showroom Tax’, is being implemented to encourage the use of lower CO2 emission vehicles.
It also effectively means that anyone buying a brand new car will pay a different rate of Road Tax for their first tax disc before they can drive the new car away from the dealership showroom. From the second tax disc onwards they will then pay the standard VED rate. Secondly, the more pollution-prone the new vehicle, the more one would have to pay.
A gas guzzling high emission 4 x 4 SUV or Sports Car user will have to shell out £950 for the first year of Road Tax. Any cars bought in Road Tax Bands A to D would incur no charges in the first year of car tax.
The Showroom Tax has resulted in car manufacturers developing new low CO2 emission cars across all vehicle types, not just Superminis /City Cars. A buyer can now purchase from the ever growing number of family-sized cars that will be free to drive in the first year with the new Showroom Tax.
The step is seen as a positive step by environmentalists and ‘Go Green’ backers as it persuades buyers to do a little research on the CO2 emission status of their car and then purchase a new car that has low CO2 emissions either through Hybrid, Start & Stop or Diesel Particulate Filter technology.
The scheme by its very nature should allow buyers to save money by investing in a low emission and CO2 conscious car than a larger, more-petrol consuming vehicle.
Below are the VED rates for new cars registered after March 1, 2010. In the second year VED road tax rates will revert to the regular rate for that vehicle.
First-year VED rates in 2010-11
Band A (up to 100g/km CO2) no fee
Band B (101-110g/km CO2) no fee
Band C (111-120g/km CO2) no fee
Band D (121-130g/km CO2) no fee
Band E (131-140g/km CO2) £110
Band F (141- 150g/km CO2) £125
Band G (151 to 165g/km CO2) £155
Band H (166 to 175g/km CO2) £250
Band I (176 to 185g/km CO2) £300
Band J (186 to 200g/km CO2) £425
Band K (201 to 225g/km CO2) £550
Band L (226 to 255g/km CO2) £750
Band M (Over 255g/km CO2) £950
