Car tax rates and bandings

The structure of vehicle tax (vehicle excise duty) will be reformed from 2009, to reward drivers of more fuel efficient cars and encourage them to consider the environmental performance when buying a new car.

More tax bands

New, smaller bands will be introduced from 1 April 2009 (for cars registered after 1 March 2001), so that a small change in carbon dioxide (CO2) emissions has a bigger effect on the cost of vehicle tax. These changes include:

• reduced rates for cars that emit up to 150g of CO2 per km
• increased rates for the most polluting cars
• a new top band for cars that emit more than 255g of CO2 per km

Alternative fuel cars will receive a discount of £20 (bands A to I) or £15 (bands J to M) in 2009-10, and £10 (all bands) in 2010-11.

First year rates

There will also be a new rate for the first year of owning a new car from 1 April 2010, with higher rates for the most polluting cars.

For the least polluting new cars, which emit 130g of CO2 per km or less, the first year rate will be zero. For new cars that emit between 131 and 160g of CO2 per km, the first year rate will be the same as the standard rate.

(quoting government website).