"Showroom tax" set to bite buyers

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Already burdened by high-rates of car insurance from some unscrupulous providers, first-time buyers are to face a further financial penalty in the form of a "showroom tax" due for introduction in April.

The new regulations, which come into effect on April 1 2010, will see the worst-hit models slapped with a £300 tax fee within the first year of purchase, research by Autotrader has revealed.

Magazine marketing director Matt Thompson said many drivers were unaware of the impending change.

"Following its introduction in the 2008 budget, the Showroom Tax has been brought in over a two-year time span. The time delay means many potential buyers are unaware of the impending rise in cost," he said.

Prospective buyers hoping to avoid the sting have two choices: buy before April 1 or choose a car that falls into a lower taxation band.

Despite the fee, Thompson said the new regulations weren't all bad, stating: "Popular cars with lower emissions such as the Mini Cooper, the Ford Fiesta and the Vauxhall Corsa will now avoid car tax for the first year thanks to the new system.

"Drivers and eco-friendly motorists who don't want to be stung by the new Showroom Tax, should choose a vehicle from tax-band A. Smart Fortwo Cdi's, the Ford Fiesta ECOnetic and the Volkswagen Polo BlueMotion are among the cars avoiding tax altogether - and not just in the first year."

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