From April 2017 however, the Chancellor has introduced new rates that will significantly reduce the tax incentive to drive a more fuel efficient vehicle and have actually made it cheaper in the medium term to drive a less efficient one than it costs today.
Taking the figures from the new rates as shown in the table below and using the same example gives quite different results.
From April, instead of paying just £150 over five years for a group C car, a driver purchasing such a vehicle will pay £160 in the first year alone followed by £140 a year for the next four years giving a total bill of £720, a 380% increase.
However, buying a car that emits 255mg/km, the old Group M, will now cost £2,000 in the first year and the identical £140 for the following four years, giving a total bill of £2,560, actually a 15% reduction over the cost if brought today.
Only if the new vehicle costs more than £40,000 will fuel hungry vehicles cost more in the medium term as they will attract a supplementary charge of £310 for each of the first five years.