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New car tax rules are coming in soon – so here's everything you need to know about them

Car owners may be forced to fork out more money due to the major changes

New car tax rules are coming in soon, meaning changes to how much you pay to keep your motor on the road.

The rules come in to force on April 1 – just over six weeks away – and some of the differences mean seven out of 10 of us face shelling out more money thanks to the revised Vehicle Excise Duty (VED) tax bands.

Some of the most popular cars, even those considered eco-friendly, may have to fork out an extra £900 over five years, reports the Exeter Express and Echo .

Here is everything you need to know:

Will I be affected?

Under the new rules only electric and hydrogen cars will be exempt – and all other cars will pay a flat rate of £140.

The amount of carbon dioxide in a car’s exhaust gases is calculated using a standard European test and published in every brochure.

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And the results show the average amount of carbon dioxide produced for every kilometre that a car drives.

Carbon dioxide is measured in grams, so the results are written as g/km CO2.

A car emitting 99g/km bought before April 1 will be free of road tax for life.

Those bought after the date will cost £120 in the first year, and £140 a year thereafter.

Cars emitting 131g/km will be taxed £200 instead of £130, those emitting 151g/km will be charged £500 instead of £180, and cars emitting 171g/km will be charged £800 instead of £295, while those emitting 191g/km will be charged £1,200 instead of £490.

The highest possible charge will continue to apply to those emitting over 255g/km, but that will rise from £1,100 to £2,000.

However, those buying high-polluting cars may even break even, with tax set higher in the first year and subsequently falling every year after that.

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Why are they doing it?

The current structure based on CO2 bands was introduced in 2001 when the average emission of a new UK car was 178 gCO2/km.

The Band A threshold of 100 gCO2/km, below which cars pay no VED, was introduced in 2003, when average new car emissions were 173 gCO2/km.

Since then, to meet EU emissions targets average new car emissions have fallen to 125 gCO2/km.

This means that an increasingly large number of ordinary cars now fall into the zero- or lower-rated VED bands, meaning they pay no tax at all.

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What if I can afford a luxury car?

It will be even worse for those who want to buy luxury or low emissions cars.

Currently, they are tax free but the cost will rocket to £310 a year from the second year of operation.

Cars worth more than £40,000 that produce polluting emissions will have to pay £450 a year in years two to six.

So what do I do now?

James Hind, founder of the car buying site carwow.co.uk , says: "Some models will cost significantly more to tax each year, so there are long-term savings to be had by buying before the new system kicks in.

"Hybrid cars and small petrol-powered city cars will be cheaper to tax if you buy before April 1."

If you are unable to buy your low-emissions car before April, then it is worth considering a nearly-new car, which will continue to be taxed under the old system.

Could I actually be better off?

Possibly. A report by consumer website Honest John says some car owners will save up to £245 a year.

The rules are being introduced as greener cars, which until now have benefited from lower car tax, increase in numbers on the road.

That means the Government has been losing out on tax revenue.

This will be reversed as the UK's best selling car – the Ford Fiesta 1.0 EcoBoost 100PS – will now cost owners £540 more to tax over four years.

Zero-emission cars will not be exempt from the changes on April 1.

After one free year, owners of expensive to buy electric cars – that's anything that costs over £40,000, will have to pay £310 a year.

The changes affect all new cars, registered from April 1 this year.

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Currently you could buy some types of Vauxhall Corsa, Ford Focus, Ford Fiesta, Volkswagen Golf or Nissan Qashqai and pay zero car tax.

Anything that emits less than 99g/km doesn't qualify for VED under the current system.

But from April 1 this year you will end up paying more than £125 a year for all of those cars.

The new system means there are three bands.

Zero emission cars pay no tax. Standard cars (anything over zero) pay £140 a year and owners of any car that costs more than £40,000 – regardless of its emissions – will pay £310 for five years.

On top of that, in the first year, cars are rated on their carbon-dioxide emissions and will pay a one-off VED of between nothing and £2,000.

So owners of hybrid cars, who currently pay no car tax, will pay £10 in year one, then £140 a year after that.

Owners of some high-performance cars, or cars which guzzle gas, will be better off – as the yearly flat rate of £140 is less than they currently pay.

Honest John's managing editor, Daniel Powell, said: "Many motorists are unaware of the changes that are coming for VED, but the fact of the matter is this: the system is changing, and low emissions cars won't be as tax efficient as they were before."

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