Drivers warned road tax changes will knock up to £1,000 off car values

Industry experts say second-hand vehicle values are already plummeting as a result of the controversial decision in the Budget to increase vehicle excise duty.

Figures yesterday suggested that drivers who bought their cars between 2001 and 2006 will lose a total of £800million.

Many vehicles are expected to become virtually worthless

Ministers claim that backdated tax increases on cars registered since March 2001 will make drivers of the most polluting vehicles switch to more environmentally friendly models.

But the plan has triggered a rebellion among Labour MPs, who say it is unfair to penalise motorists for past purchases and that the rises will affect poor families.

The changes, which will mean the price of tax discs for some cars rising from £210 to £430, are now depressing the second-hand car market.

Independent car reviewers Parkers say the road tax increases will knock at least £500 off the resale value of these cars.

And CAP, an industry body that assesses used-car values, said that some models will lose as much as £1,000 in value.

Many vehicles are expected to become virtually worthless and unsaleable.

'Hardest hit of all will be drivers of the automatic variants of larger- engine cars up to seven years old who will be hit by a double whammy of huge increases in vehicle excise duty and more rapid depreciation which could severely affect values,' said CAP.

'We are talking about ordinary family cars with a typical value of £3,000 or less.

In years to come these new rates will come close to writing off the value of many of these cars.'

Tory treasury spokesman Justine Greening cited the example of a 2001 Renault Espace 3.0 V6 Auto, which will see its resale value plummet-from £1,800 to £1,000.

A 2001 Hyundai Lantra will be reduced in value from £950 to £450  -  the cost of its annual tax disc.

Miss Greening described the hidden cost of the Government's changes as the 'final insult to hard-pressed motorists'.

'People face an impossible situation,' she said.

'They can't afford to fill up their car because of fuel duty; they can't afford a new car because of the credit crunch; and even if they could, now they can't even sell their old car because Government road tax hikes make it worthless.'

More than 50 Labour MPs have supported a Commons motion calling for the retrospective aspect of the tax changes to be scrapped.

To head off another damaging rebellion last month, the Treasury privately assured MPs that the policy would be reviewed.

But rebel MPs are warning that unless it is ditched altogether, it threatens to become Labour's 'poll tax on wheels'.

The tax hikes were slipped out in the detail of the Budget statement in March and the Treasury has been reluctant to disclose details.

The fact that more than 13million drivers will be worse off emerged only after recent Parliamentary questions.

Gordon Brown has been accused of misleading voters over the impact of the hikes.

The Prime Minister told MPs in June that 'the majority of drivers will benefit' from the plan, when Treasury figures show that less than 20 per cent will be better off because of tax cuts on cars with lower emissions.