TaxRates: new bands and chargesThe changes to the VRT system, as announced by Minister for Finance Brian Cowen in last week's Budget have several implications to the price that buyers will pay for individual models from July 2008.
The VRT rate applicable to newly registered cars on or after July 1st 2008 will be determined by the carbon dioxide (CO2) emissions rating of the car and will no longer be related to engine size.
A seven-band CO2 emissions system - A to G - will apply, and there will be seven VRT rates ranging from 14 per cent to 36 per cent, depending on the car's emission level.
The result is that from July, some lower emission vehicles will be cheaper than before, while some higher emission vehicles will increase in price.
The changes will have no effect on the current fleet as emission taxation only applies to new cars sold from July 1st. New cars will also be required to carry labels showing their emissions, so there can be no confusion as to the tax implications.
In terms of road tax, new rates will come into effect from February 1st relating to cars already registered. These will involve a 9.5 per cent rise in road tax for cars with engines up to 2.5 litres and 11 per cent for cars with engines over 2.5 litres.
A second system will be introduced from July 1st for cars registered on or after that date.
This means that although a new car sold in June may have a low emissions level, it will still be taxed under the old system of engine size for the rest of its time on the road, while a new car registered from July 1st will benefit from the new CO2 tax system.