Millions facing higher car taxNine million will be hit by changes

10 July 2008

Traffic jam

Don't let holiday stress rob you of your enjoyment

More than 9 million drivers will be up to £245 worse off when new road tax price hikes come into force, the government has admitted.

The changes – which ministers say are aimed at penalising the most polluting vehicles - will mean rises of up to £245 for 43% of motorists by April 2010.

At the same time, less than 20% will be better off in real terms.

Currently, the maximum road tax for a car registered between March 2001 and March 2006 is £210.

Range Rovers

However, from April 2010 that will increase to £455 for the heaviest polluters - cars emitting carbon dioxide (CO2) of more than 255g/km. Cars with smaller engines could face a £100 rise.

In response to a Parliamentary question, Treasury minister Angela Eagle revealed that of the 21.9 million cars on British roads by April 2010, 43% - or 9.4 million - will face higher bills.

Some 8.4 million – or 39% - will be left no better off and just 18% - 4.1 million – are set to benefit financially.

Experts calculate that the Exchequer will have received more than £1bn in extra revenue by 2011.

Fuel prices

Critics said that drivers of certain modest cars would pay more, which, on top of soaring fuel prices, would hit family budgets hard.

The reforms will mean that road tax will be restructured to incorporate six new bands from 2009, including a top band (band M) for cars emitting more than 255g/km. 

Treasury minister Angela Eagle says that five of the UK's 30 most popular cars would pay more under the changes.

Land Rover

These are the 2.2 litre diesel Land Rover Freelander, the 1.6 unleaded Toyota Auris, the 2.2 diesel Honda CR-V, the 1.8 unleaded Vauxhall Vectra and the 1.6 unleaded Vauxhall Zafira.

Which? Car editor Richard Headland said: ' The problem with this "environmental" car tax system is that it's being applied retrospectively to cars registered since 2001 - many drivers will be penalised for cars they bought several years ago.'

Resale value

He added: 'Some carmakers have taken big steps to reduce measured CO2 emissions in the past year or two - so if you're buying a new car now you have a wider choice of cars qualifying for low road tax.

'That wasn't the case in 2001, though, and the government needs to acknowledge that and consider applying the new tax rates only to newly registered cars.

'There is also increasing evidence that the rises on older cars will seriously dent their resale values - that may be good news if you want to buy one, but is a further blow to motorists who decide to sell and buy a lower emissions car.'