Budget 2006: Brown turns green? - Hitting the polluters?

From tomorrow, millions of motorists could pay less road tax – but every car driver will spend more at the pumps from September when fuel duty will rise.

Today's budget from Chancellor Gordon Brown included a shake-up of vehicle excise duty (VED) which will take effect tomorrow – part of a package of measures designed to help the UK reduce its carbon dioxide emissions.

Click here to see a table detailing all of the VED changes

Owners of cars emitting 100g/km of carbon dioxide or less won't pay any road tax road tax each year, although this will only beneft 400 drivers in the UK that either own a Honda Insight hybrid or imported diesel Smart Fourtwo. No new model currently on sale has low enough emissions to qualify for this zero tax rating - Toyota's Prius comes closest at 104g/km.

Other rates for cars at the lower end of the scale are also reduced, however – a move which Mr Brown said would increase the number of people paying less than £100 a year from today's 300,000 to three million.

The Chancellor said a new tax band for cars producing more than 225g/km of carbon dioxide or more would pay for these reductions. Cars in this top band will pay £210 a year, up to £45 more than before. Confusingly, only new cars registered from tomorrow will be subject to this new top rate.

If you've already registered a car that produces this much CO2, you'll find yourself in the previous top-ranking band F when you come to re-tax your car. This band is £25-a-year more expensive from tomorrow, an increase which will affect many motorists.

While motorists might start saving in road tax, increases in petrol and diesel fuel duty are on their way in September. The fuel duty increases are described as inflationary and will put 1.25p on every litre of petrol or diesel.

Let us know what you think – click here to tell us your opinions.