A MAJOR shake-up in the way road tax is calculated for new cars is confusing motorists, say some Swindon car dealers.

New rules come into force on April 1 to replace the bands that were introduced in 2001 to incentivise new car buyers to choose models with lower CO2 emissions.

But with a large percentage of new car sales now attracting a zero or low rating, the Government has decided to introduce a new tax regime which it hopes will raise an extra £1.4bn over the next four years.

From the start of next month, all new cars will be taxed against three new Vehicle Excise Duty bands - zero, standard, and premium.

The amount of tax will be calculated based on a combination of emissions and the list price of the vehicle.

Only cars that emit zero CO2 - like electric vehicles and those utilising hydrogen fuel technology – and cost less than £40,000, will qualify for zero road tax.

Most petrol and diesel cars will attract a standard rate of £140 a year, while hybrid owners will pay £130.

Additionally, the Government is introducing new first year rates, which are calculated on CO2 emission levels.

Most car buyers will pay between £100 and £160 for the first year rate, although the most polluting cars will pay a levy of as much as £2,000.

Any vehicle with a list price over £40,000 will attract an additional rate of £310 per year for the first five years.

A premium brand diesel model emitting 131 to 140 g per km registered before April 1 will cost £650 over five years in road tax.

The new rules will see that figure jump to £2,000.

Wesley Cole, general manager at Swindon’s Now Vauxhall dealership, said: “This will have a major impact on the cost of ownership of a premium brand vehicle, and may well see a shift from executive saloons and 4x4s to smaller versions in their respective ranges.

“This will also have a significant impact on the company car market. The increase in the cost of road tax could well see a shift away from firms supplying company cars to a car allowance model, whereby the individual would be responsible for the cost of ownership.

“This is certainly not for environmental reasons - if anything the new taxation system makes carbon dioxide emissions almost irrelevant when deciding what new car to buy, which for me is a backward step.

“We need to see the changes for what they are – a tax increase from the Government. If you are considering buying a new car this year you may want to complete the transaction sooner rather than later to beat the tax man.”

Dominic Threlfall, managing director of Hyundai and Suzuki franchise Pebley Beach, says buyers of new and used cars are puzzled by what the new legislation means for them.

“The new rules only apply to new car buyers after April 1, so if you get in quick you can save a few hundred pounds on the running cost of a diesel, petrol, or hybrid," he said.

“Sadly, the drivers most badly hit will be those buying hybrids and low emission vehicles, who might have expected a zero-rated road tax.

“The good news, though, is that some of the extra revenue will be spent on improving the roads - so what you’re spending on road tax you might make back on lower repair bills.”