Thousands of drivers have been warned that they may end up in negative equity because of the government’s changes to car tax.

Cars between one and three years old could slump in value by 25 per cent this year, compared with normal depreciation of about 19 per cent, according to Glass’s Guide, which monitors vehicle values.

It blames the credit crunch as well as changes to vehicle excise duty, which will see the tax on some larger family cars go up from £210 to £440 from April after the government scrapped the exemption for cars bought before 2006.

Thousands of drivers who buy their cars using finance deals such as personal contract purchase plans could find they are saddled with debt worth more than their vehicle.

There are already signs of a slump in the second-hand market following the widely criticised car-tax changes: prices for cars between one and three years old fell 12 per cent in the first six months of the year, against the normal depreciation of 8 per cent.

Adrian Rushmore, managing editor of Glass’s, said: “This is among the worst, if not the worst, additional change in prices we have recorded.”

Owners of family cars such as the Ford Galaxy, the Vauxhall Zafira, the Renault Espace and the Volvo XC90 face an increase in duty of up to £245 by 2010.

A seven-seater Renault Espace 3.5 V6 Initiale auto, with a CO2 rating of 289g per km, avoids the top band G rate (£400) if it was purchased before March 23, 2006. Owners are charged only £210, the rate for cars in the next band down.

However, with the scrapping of the exemption and the introduction of new charging bands next year, the vehicle would be in top band M, costing the owner £440 next year and £455 in 2010.

Those who have bought the car using personal contract purchase, which is designed to let you buy a car while avoiding depreciation, are particularly at risk.

Under the plan, dealers set a minimum guaranteed future value (MGFV), which is a conservative estimate of how much the car will be worth in two or three years.

Buyers put down an initial deposit and then make monthly repayments based on the remaining value of the car, less the guaranteed future value. Interest is charged on the MGFV as well as the outstanding balance. After the deal runs out, buyers have the option of either paying the MGFV and buying the car outright or handing the car back.

In the past, drivers found their cars were worth several thousand pounds more than the MGFV at the end of the deal. They could use this to put a deposit on another personal contract purchase deal. However, cars are increasingly worth less than the future value given at the time of purchase so customers have to either relinquish the car or end up paying a final payment that is more than the value of the car.

If you bought a one-year-old Renaut Espace in 2006 with 10,000 miles on the clock, it would have cost you £21,047. A personal contract purchase dealer would assume the vehicle would depreciate by about 13 per cent a year.

With a two-year deal, the car would be worth about £15,930 at the end of the contract period although this will vary depending on the dealer and how many miles you have covered.

With the new tax rates, however, the value may plummet to something like £13,550 potentially leaving you with £2,380 negative equity if you decided to buy the car.

Matt Sanger of What Car? magazine said: “Many people will not yet realise the extent to which their cars have depreciated. We expect this to happen in the next six months or so as they come to the end of their agreements.”

The new tax regime only applies to vehicles registered after March 2001, so will affect all cars that are “Y” registered onwards. In some cases, the rate of depreciation is an additional 30 per cent to 40 per cent in one year on top of what is expected because of wear and tear, according to CAP, a car-price monitoring firm.

A two-litre Rover 75 automatic with 60,000 miles registered in March 2001 costs about £4,000 now. You would normally expect to sell the car next year for about £2,500, but you would be lucky to get between £1,000 and £1,500.

Mark Norman of CAP said: “Though the tax increase is only an additional £230, those buying the car will think in terms of two or three years so the additional tax does have a significant impact on the overall value of the vehicle.”