This will impose a first-year road tax rate, for the highest polluting cars, of £950.
But the chancellor has performed a U-turn on the details of the controversial new 13-band VED road tax system.
The new bands will still come into force in April 2009. However, for the first year, the maximum increase for all cars will be £5.
Then, for 2010/11, the maximum increase will be capped at £30. Lower-polluting cars will see a decrease of £30 in the yearly rate.
This means, in April 2009, the top ‘M’ band will charge motorists £405, instead of today’s top £400 rate. This will rise to £435 in 2010.
Secondhand cars registered after March 2001 will be included in the changes. However, the Chancellor did include a significant proviso.
Cars registered between 1 March 2001 and 23 March 2006, and emitting over 225g/km of CO2, will move into band ‘K’.
The U-turn means they will have a top rate cap of £215 next year, and £245 from 2010. They will escape the top £435 road tax band.
This will be welcome news to dealers retailing higher-emission larger secondhand models, and may help revive the used market for such models.