Motorists hit by new 'showroom tax'

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From Thursday, motorists purchasing the most-polluting new models will need to pay a "showroom tax" that will add to vehicle costs.

The need to find the cheapest car insurance deals becomes even more important as buyers face higher vehicle excise duty (VED) in the first year.

Cars with emission rates of more than 255g of CO2 per kilometre will be hit with the maximum VED of £950 for the first year.

For the models with highest emissions, the new rates equate to an increase of £545 for the first year and £30 for each subsequent year. But based on 2009 registrations, only 1.5 per cent of cars come in this VED band.

At the other end of the scale, vehicles with emissions lower than 130g/km will not need to pay any VED in the first 12 months.

For cars emitting 121-130g/km, the VED changes equate to a first-year reduction of up to £120 on current rates, or £90 on the new increased rates.

Last year's figures indicate this will apply to approximately 7.2 per cent of the new car market, with the reduction encouraging sales of the lowest-emitting models.

Based on the 2009 market, the most popular band, accounting for 19.7 per cent of the market, will be for cars emitting 131-140g/km where motorists will experience a £110 charge.

Copyright © Press Association 2010

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