Car insurance policyholders buying a new vehicle from today (April 1st) should be aware that they will be subject to an altered rate of vehicle excise duty (VED).
The new levy, which has been referred to as a showroom tax, is designed to encourage buyers to purchase lower-emitting models.
It is a one-off rate and will apply to all new vehicles for the first year of registration.
The amount of VED that car insurance policyholders pay will be based on the vehicle’s CO2 emissions and cars producing less that 130g/km will be exempt from the charges.
Car insurance policyholders who buy vehicles that emit over 255g/km will be charged £950 for the first year before reverting to the new standard rate for each subsequent year.
Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said he was disappointed the tax had not been deferred in the Budget.
“Environmental taxes need to be clear and consistent so that motorists can be confident that they will reap the benefits from their decision,” he added.
Recent research by Autoquake.com found that the number of motorists who would buy a vehicle online has risen by 14 per cent over the past three years.
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