Showroom tax explained

New car buyers now have to pay more for the one-off first year 'showroom tax'.

What is showroom tax?

The 'showroom tax' is a way of charging extra money on those cars that are the most polluting.

Anyone buying a new car with emissions of more than 255g/km will have to pay £1,000 in the first year. This will then drop down to the increased yearly tax cost of £460.

Any car in tax bands H and above will have to pay more in the first-year tax than they would with the annual road tax.

What are the reasons for the tax? 

The main reason behind the tax is an attempt to try to get people out of high polluting cars and in to cars that are better for the environment. It's also trying to show people that cars that are bad for the planet are also bad on your wallet.

How much am I going to get charged?

This obviously all depends on the emissions of the car you are looking to buy. Anything less than 130g/km then you will have to pay nothing. But from 131g/km you will have to pay £115 following a price rise in the 2011 Budget. This then continues to rise through the various tax ratings until you hit the top rate of £1,000 for the cars with emissions of more than 255g/km.

This highest rate of tax will apply to cars like the Mazda RX-8 and the Range Rover Sport 2.7-litre TDV6 S auto. But it's cars like the Renault Kangoo 1.6-litre Extreme that will be the big surprise for buyers as they will be charged a first-year rate of £445 on this model. 

Don't be caught out on new cars and the showroom tax. We've put together a list of cars that could cost more than you think.

Road tax and showroom tax from April 2011