Diesel car tax rises – who will be affected and by how much?

Diesel car tax rises – who will be affected and by how much?
As the dust settles from the 2017 Autumn Budget, many are asking: "what are the actual costs of next year’s changes to drivers?"

Pinning down precise estimates of just how many new diesel cars will be affected by the hike in first-year vehicle excise duty (VED) – and at what cost to buyers – has emerged as the key point of discussion.

While the RAC aims to seek clarity from the industry, the Telegraph is reporting that from April 2018, up to three million new diesel cars could be affected by the higher taxes – which, based on new diesel sales figures, is a multiple-year projection.

READ MORE: Sigh of relief for diesel drivers after ‘light touch’ Budget

The one-band increase in first-year vehicle excise duty (VED) will apply only to new cars which fail to meet new real life driving emissions standards that will not be mandatory until at least 2020.

So what do we know about real-word emissions testing? Back in September, we saw the introduction of the Real Driving Emissions 1 (RDE1) benchmark, required of newly-approved Euro 6 diesel cars.

From April 2018 though, the one-band VED increase will apply to all new diesel cars bought which don’t meet the standards of a new criteria, RDE2 – and currently few if any new cars do.

The big question then lies within the manufacturing sector: will carmakers be able to push through new models which adhere to RDE2 in time for the tax change in April?

According to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, the answer is no.

Speaking after the Chancellor’s statement, Mr Hawes warned that it would be “unrealistic” to suggest that car builders could fast-track the roll-out of next generation clean diesel technology, which takes years to develop, in such a short space of time.

READ MORE: The real facts on ‘dirty’ diesels

So to what extent could the typical UK diesel car buyer be stung by the first-year VED hike? Well for an overall majority, it’s potentially not an earth-shattering one.

Take a driver who buys a new Ford Fiesta in April 2018. The model does not meet the new RDE2 requirement and as such will be liable for the tax increase.

Currently, first-year VED stands at £120. Buying the car post-April would see a £20 increase – to £140, in the first year only.

The effect of yesterday’s announcement is more obvious when considering premium, high CO2 emitting models – for which increases will be felt in the hundreds of pounds.

Currently, first-year VED on the diesel models emitting 191-225 g/km CO2 – a Mercedes Benz E or S-Class, for example – stands at £1,200.

Due to their higher CO2 emissions, however, this would rise to £1,700 for new buyers from April 2018 – the maximum increase of £500.

In addition to private buyers, the Telegraph speculates that around 800,000 drivers of diesel company cars will see the annual amount of Company Car Tax they pay increase from 3% to 4% in light of the Budget.

Copyright Press Association 2017. Motoring News articles do not reflect the RAC's views unless clearly stated.