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A guide to the ‘New showroom tax’

From April 1 new car buyers will be hit by increased costs with the introduction of a one-off first year 'showroom tax'.

That means if you buy a new car after April 1, you’ll be charged a higher rate of road tax for the first year, based on CO2 emissions. After the first year, the rate will drop to a slightly increased annual tax cost.

Why are the changes coming into play?

The new tax is a way of discouraging people from buying the most polluting cars.
The government’s aim is to show motorists that a ‘cleaner’ car is good for their bank balance as well as the environment.
What does it actually mean?
New cars that emit less than 130g/km of CO2 will be exempt from car tax for the first year, but more polluting cars will have higher fees.
Under the current system, cars that emit more than 255g/km of CO2 have to pay £440 a year in road tax. However from April, anyone buying a new car with these emissions will have to pay £950 for the first year. This will then drop to £455.
So to minimize the impact of the ‘showroom tax’, simply lower your tax burden by buying a less polluting car.

• whether your chosen model is less polluting with an auto or manual transmission
• whether choosing a different bodystyle can lower your emissions, e.g. buy a three-door rather than a five-door
• Many manufacturers offer ‘eco’ versions of their best-selling models. However, sometimes you pay significantly more for these models than you’ll save in reduced road tax rates.

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