The government's increase in taxation of diesel-powered vehicles, which has come into force with the new tax year that starts today, affects every new diesel car on sale.
First announced in Chancellor Philip Hammond's Autumn Budget last year, the changes push new diesel cars registered after 1 April 2018 up a tax band and see diesel-powered company car drivers faced with a benefit-in-kind supplement tax increase from 3% to 4%.
Vehicles that conform to the Euro 6d standard of air quality are exempt from the new diesel VED supplement, but according to the government-backed Low Carbon Vehicle Partnership, "there are currently no new diesel cars on sale that meet this stricter standard".
All new diesel-powered cars will have to comply with Euro 6d from 2020; the cleanest new diesel cars on sale currently conform to Euro 6c, Europe's present required level.
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The new emissions tests are broader in scope than the older NEDC tests, and include a big focus on NOx emissions. The second step, which the government is using as the basis for its tax hike, gives cars a 'conformity factor' of 50%. To ensure cars meet this conformity level, they will have to ensure cars fall well below the currently allowed NOx limits.
The process is more stringent than the old lab-based NEDC (New European Driving Cycle) system. Current diesel cars are only required by European law to conform to RDE step 1 standards, meaning the Budget's requirement for step two could affect even the very latest models. This essentially means the government is penalising models that don't conform to a 2020 regulation from April 2018.
The UK's Society of Motor Manufacturers and Traders boss Mike Hawes stated that the changes were unfair back in autumn. He said: "It's unrealistic to think that we can fast-track the introduction of the next generation of clean diesel technology which takes years to develop, in just four months. This budget will also do nothing to remove the oldest, most polluting vehicles from our roads in the coming years.”
The new diesel tax hike, which Hammond said applies exclusively to cars, leaving van and lorry drivers unaffected, forms part of the government’s plans to fight Britain’s growing air quality problem, of which it labels diesel pollution a major contributor.
But Hawes believes that targeting the newest diesels is the wrong method to take. He said: "We know the government wanted to raise revenue to pay for the air quality plan. We recognise that they didn’t want to penalise existing diesel-car owners who bought their cars in good faith. But we want to encourage the latest technology”, referring to new diesel cars on the market. He added that there was “nothing in the budget about getting older vehicles off the road,” which are the worst offenders in the quest for better air quality".
Hammond said that the money generated by the raised diesel taxes, which the government estimates will amount to £70 million in 2018 and £35m the year after, would be used to fund air quality improving projects.
Referring to the changes to diesel company car tax, the AA's director of fleet and SMEs (small and medium sized enterprises), Stuart Thomas, said that the new adjustments have been met with confusion.
“Fleet managers are positively investigating alternative fuel sources, but our research shows they don’t feel they have enough information to take a strategic step forward," he said. "A number of industry roadmaps exist which plot the UK’s journey towards a low-carbon future but which are heavily jargoned and not easily understood by the SME sector."