The Chancellor has announced during his recent budget that to help families and businesses, fuel duty increases will be phased in gradually rather than being imposed directly after April 1st. Tax rises will be made over a period of months, the first increase of one-pence per-litre took place at just after midnight on April 1st but the second penny tax hike has been delayed until October 1st while the last increase set at 0.76p will be made on January 1st next year. However, it’s worth noting that one-pence per-litre (in real terms) will be added on the date of 1st April every year, from next year until 2014.

Alistair Darling predicts that the rise in the cost of fuel will reduce CO2 emissions emitted by vehicles by approximately 1.7 million tonnes by 2014/2015 as buyers choose their cars more carefully. It’s the Government’s way of persuading motorists to purchase less polluting, greener vehicles.

In addition, the budget on March 24th also saw the introduction of a one-off ‘Showroom Tax’ which is being levied on new car buyers. In a similar fashion to the road fund licence, the more polluting the car, the higher the tax.

Before the change on April 1st, cars having emissions of more than 255g/km of CO2 had to pay annual road tax set at £440. Now, anyone who purchases a car producing this level of CO2 emissions will be forced to pay £950 in the first year. The tax is then reduced down to an increased annual rate of £455.

Showroom tax on any vehicle included in tax bands ‘H’ and above is higher than the subsequent annual road tax. There’s good news for car buyers who choose to purchase cars emitting anything below 130g/km of CO2 as they’ll not have to pay any showroom tax at all. However, venture into the higher figure of 131g/km and they’ll be hit by tax set at £115. Tax rates continue to rise until you reach the maximum rate of £950 for any vehicle producing more than 255g/km of CO2.

This higher showroom tax will penalise motorists buying most large luxury prestige cars, sports car and larger 4x4s but then the majority of those in a position to purchase such vehicles in the first place may not be too concerned.

There are, however, some models which are unexpectedly effected by this new one-off, first-year showroom tax, cars such as Renault’s Kangoo 1.6-litre Extreme, with buyers being hit by hefty tax of £425.

So, the morale for any potential car buyer wishing to minimise the amount of showroom tax that they have to fork out must be this. Take your time to look carefully at the CO2 emissions produced by the cars in the sector of the market that you are most interested in making your purchase. Then choose wisely.