Residual values of cars that emit more than 226g/km of CO2 will be hit hard following the 98% increase in Vehicle Excise Duty (VED) announced by the Chancellor recently.

The cars that will experience the biggest jump in VED and therefore the most significant fall in residual values are those emitting over 226g/km that were registered after March 1, 2001 but before March 23, 2006.

These cars, which move from the current band F to the new bands L or M, will see their VED jump from £210 to a minimum of £415 from next year - a significant amount relative to their likely value.

“As prices for older cars reduce over time, the tax burden comes into greater focus for prospective buyers, affecting demand and values,” said Adrian Rushmore, managing editor at EurotaxGlass’s.

“Such a sharp rise in VED could well have implications for the used car market in the coming months and years.”