Tens of thousands of families face higher motoring costs after a Government decision to include cars up to seven years old.

The Treasury is abolishing the exemption for older cars from the highest rates of excise duty. This means that owners of larger cars bought since 2001 will find that their road tax will rise steeply from next April.

The increases are being introduced in two stages, with owners of cars emitting more than 225g/km who are now paying £210 a year being charged £300 in 2009 and up to £455 in 2010.

Owners of medium-sized cars that emit more than 180g/km will find taxes rising by up to £100.

In both cases, family cars such as MPVs and large saloons will be affected.

There are fears that those who try to sell their cars will find their values on the used car market have fallen dramatically as a result.

The AA said that many people were falling into a “negative equity” trap, with their cars worth thousands of pounds less than their outstanding loans.

Motoring groups said it was unfair to penalise families who bought their cars before the Government announced its current policy on CO2 emissions.

The Band G rate for cars emitting more than 225g/km was not introduced until 2006. As Chancellor, Gordon Brown said in that year’s Budget that no car registered before March 23, 2006 would have to pay the band G rate.

In last month’s Budget, Alistair Darling announced a new system of 13 tax bands, from A to M, coming into force next April and a showroom tax of £950 starting in April 2010.

This will raise £1.2 billion, but the news that this will largely come from existing cars being taxed retrospectively was hidden within a treasury document.

2008/9 Vehicle Excise Duty (VED) rates

VED BandCO2 (g/km)
Petrol carDiesel car
AUp to 100£0£0
B101-120£35£35
C121-150£120£120
D151-165£145£145
E166-185£170£170
FOver 185£210£210
G*Over 225£400£400

*For cars registered on or after 23rd March 2006.

2009/10 Vehicle Excise Duty (VED) rates

VED BandCO2 (g/km)
Standard rate
AUp to 100£0
B101-110£20
C111-120£30
D121-130£90
E131-140£110
F141-150£120
G151-160£150
H161-170£175
I171-180£205
J181-200£260
K201-225£300
L226-255£415
MOver 256£440

2010/11 Vehicle Excise Duty (VED) rates

VED BandCO2 (g/km)
First year
Standard rate
AUp to 100£0£0
B101-110£0£20
C111-120£0£35
D121-130£0£95
E131-140£115£115
F141-150£125£125
G151-160£155£155
H161-170£250£180
I171-180£300£210
J181-200£425£270
K201-225£550£310
L226-255£750£430
MOver 256£950£455

Cars registered before March 2001, are charged according to engine size: £120 up to 1550cc and £185 for larger engine sizes.