Car tax will rise for any new diesel cars registered after April 2018 that still don’t meet the latest standards – as part of a “light touch approach” taken in the 2017 Autumn Budget.
Contrary to early reports in several mainstream outlets, the one-band increase in first-year vehicle excise duty (VED) will apply only to new cars which fail to meet the latest real life driving standards – and will also not affect any existing owners.
This means it will only affect new Euro 6 diesels that don't meet 'real-world' vehicle emissions tests, as opposed to all new diesels registered after April 2018.
The announcement is in effect a rallying cry to manufacturers, ensuring new models undergo real world standards testing which, if they comply, means only a minority of new buyers will be hit by the increase.
In the other major motoring headline, fuel duty on both petrol and diesel remains frozen for another year. The RAC says the Chancellor has “listened to motorists and business owners who are struggling with higher prices at the pumps”.
Mr Hammond explained the tax levy on new diesels will apply to cars only – with “no white van man or woman” hit by the measure – and will fund a £220 million clean air fund to help improve air quality on a local level.
The Chancellor said: “Drivers buying a new car will be able to avoid this charge as soon as manufacturers bring forward the next-generation cleaner diesels that we all want to see.”
VED is based on a vehicle's CO2 emissions and the cost for the first 12 months ranges from zero to £2,000.
RAC head of external affairs Peter Williams admitted the Government had “chosen to be relatively light touch” in the taxing of new diesel cars.
“Current beleaguered owners of diesel cars can breathe a sigh of relief that they will not be punished further by the Treasury – but they will need to keep their eyes on local authorities who may be introducing clean air zones in the near future,” he warned.
“The side effect of today’s announcement however might be that there is a risk therefore that it might encourage some to stay with their older diesel vehicles.”
Further to the VED increase on new diesels, the existing diesel supplement in Company Car Tax will rise by one percentage point, from 3% to 4%.
Elsewhere, there had been widespread concern that the Chancellor would use the Budget to levy a fuel duty rise on diesel drivers – which had faced strong criticism from the RAC among other motoring organisations – but this did not materialise.
Instead, the fuel duty rise on both petrol and diesel scheduled for April was once again frozen by the Government, continuing a trend started in March 2011.
Mr Hammond pointed out that the freeze has saved the average car driver £850, and van driver £2,100 since 2010.
The cost of diesel reached its highest level in almost three years this week, with average forecourt prices across the UK hitting £1.23 per litre.
The RAC welcomed the freeze on duty, although Mr Williams says he’d liked to have seen the Chancellor commit to no further rises this Parliament.
“Perhaps he should now consider doing away with the threat of the fuel duty escalator – that looms over private drivers and businesses before every annual Budget – for good,” he added.
Meanwhile, the Government promised to step up its support of autonomous and electric vehicles (EVs). Mr Hammond said: “Our future vehicles will be driverless, but they’ll be electric first.”
As such, he unveiled the expected £400 million investment into the electric charging infrastructure, together with a further £100 million to extend the grants on offer for those keen to purchase.
He also made available a further £40 million in supporting charging R&D, and made a point of clarifying that EV drivers who charge at work will not face taxes, underlining how “our tax laws can protect us”.
The Plug-in Grant has also been extended until 2020, with the Government offering £100 million to help consumers with the cost of purchasing new qualifying electric vehicles.
As part of its bid to see fully autonomous cars on UK roads by 2021, the Government is to make changes to the regulatory framework for safety testing.
The RAC’s Mr Williams added: “Driverless cars are coming – there is no doubt about that, but more than a third of drivers we spoke to (39%) told us that they would rather see the Government invest in improving the UK’s existing road network.
“After all, a new generation of driverless cars will still depend on the roads we have today – which, in the case of local roads in particular, are plagued with potholes. A further 1 in 4 drivers would prefer to see public money spent on health or education.”
The National Infrastructure Commission (NIC) will also launch a new innovation prize to determine how future roadbuilding should adapt to support self-driving cars.
Taken from an original article by the RAC: https://goo.gl/kq3idv