Sales tax on the way

By Mike Askew

24th March 2008

The British motor industry has received another hammer blow, with new CO2-based showroom taxes set to hit models from prestige UK marques.

Chancellor Alistair Darling’s shake-up of the VED band system comes into force next year, with all but the cleanest cars attracting a higher rate of duty.

From April 2010, models emitting more than 225g/km, such as Jaguar’s XF, will incur an extra £950 ‘showroom’ tax for the first year of ownership. Thereafter, a fee of £455 will be due – £55 more than at present. All but one model in the XF range will be hit by the levy, while every car built by Bentley, Aston Martin and Rolls-Royce will incur it.

A spokesman for the Society of Motor Manufacturers and Traders said: “This is a backward step. Forcing driv­ers out of high-value vehicles has no environmental merit, and will be seen as a smokescreen for raising revenue.”

The Budget brought better news for buyers of low-emission cars. From 2009, vehicle excise duty is cut to £30 on models emitting 150g/km and less, while those that put out 130g/km or less will be tax-exempt from 2010.