The UK Government has introduced a tax hike on new diesel cars in its Autumn Budget, as part of plans to reduce air pollution.
Chancellor Philip Hammond confirmed that diesel cars sold from April 1 2018 onwards will be pushed up a tax band unless they conform to next-generation Real Driving Emissions step 2 standards, which won't become a legal requirement until 2020. The company car tax rate for new diesel cars that don't comply to the RDE type 2 rules will be increased from 3% to 4%. Hammond had previously pledged to give at least three years of notice before changing company car tax rates.
The tax band increases and company car rate changes won't apply to diesel vehicles currently on the road. Those cars will remain in their current tax bands.
The new RDE tests measure the pollution levels of car on the road, as opposed to in a laboratory as in the old NEDC testing system, and run alongside the lab-based Worldwide Harmonised Light Vehicle Test Procedue (WLTP). The on-road RDE tests will be used to validate the results of the WLTP exams, with two steps set for how close the results of the two tests must be aligned on emissions output.
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 2 could affect even the very latest models. This essentially means the government will begin 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 believes this is unfair, stating: "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 raised from the raised diesel taxes, which the government claims 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 Budget adjustments may be met with confusion.