Showroom Tax Explained

Showroom Tax was introduced from 1st April 2010 in the UK. Showroom Tax is effectively the road tax price you will pay in the first year of ownership of a brand new car. Showroom Tax was actually announced in the 2008 budget by Alistair Darling and is a one-off rate for first year Vehicle Excise Duty (VED), which affects all cars registered after 1st April 2010. This has largely remained out of the headlines since then, with many car dealers saying consumers are unaware of it.

 

Showroom Tax Basics

The aim of Showroom Tax is to penalise high-emission vehicles with a higher first-year rate of Road Tax. The Department of Transport describes this as “First-year rates provide a stronger signal at the point of purchase that motorists can save money by choosing a lower-carbon car.” Designed to encourage buyers to choose cars with lower carbon dioxide emissions, it's believed that Showroom Tax will raise £735 million in its first year of inception.

 

In summary, Showroom Tax penalises high emission cars and encourages ownership of low emission Road Tax Band A to Band D cars which, under the new Showroom Tax legislation, will be FREE to drive in the UK for the first year in terms of Road Tax. For a full list of all current Band A to D cars click here. When you buy a new car the first year rate is included when the car is first registered so it’s an automatic cost.

Full details of Showroom Tax bands are available read Showroom Tax 2010

Choose Your Car and Model Wisely!

The introduction of Showroom Tax means it’s imperative that you do your homework and select the right version of your chosen car. By choosing the correct low CO2 model and trim specification you can save hundreds in on-going Road Tax and fuel costs. See our examples below that highlight 3 of the UKs most popular cars across the Supermini, Family and Crossover markets. Choose the WRONG high emission version of your new car and YOU will be made to pay...spot the difference! 3 year costs stated below assume no change in future road tax prices: