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Is the AA ditching its traditional yellow vans? Could these new bond funds protect your portfolio from interest rate rises? It will be impossible for any diesel car to avoid the new tax surcharge announced by Philip Hammond in last week’s budget. However, this new standard – called Real Driving Emissions Step 2 – isn’t being introduced until 2020, meaning that manufacturers aren’t even having their vehicles tested to meet this measure for another two years. All diesels clobbered by car tax rules: Philip Hammond said only next-generation cleaner diesel cars will be exempt from a hike in first-year VED car tax from April.
During his Budget statement last Wednesday afternoon, Mr Hammond said: ‘From April 2018, the first year VED rate for diesel cars that don’t meet the latest standards will go up by one band and the existing diesel supplement in company car tax will increase by one percentage point. 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. But the big problem for car buyers is that the method to test these ‘next generation cleaner diesels’ won’t be in place for more than two years. What’s the best used car you can buy? In fact, motoring magazine Autocar said that car manufacturers have only just started working on the technology required to meet the new RDE2 standard. And even if cars do meet the required emissions limits, the certification for RDE2 does not yet exist, making it impossible to prove that any car is exempt.
From April 2018, buyers of new diesel cars will have to pay one tax band higher than a petrol model in the first year. 5 billion car industry, Autocar said. Car makers have been unable to comment about the new changes since Wednesday, as there has been no communication from the Treasury about how the new system is going to work. The RDE2 standard is the second phase of a series of real-world emissions tests that were announced on the back of the VW emissions cheating scandal that broke in September 2015.
The first real-world driving measurement was introduced earlier this year and operates alongside laboratory tests used to produce fuel economy and emissions output figures for all cars sold in the European Union. Autocar editor Mark Tisshaw said the new Vehicle and Excise Duty changes ‘make no sense’ and the government had missed an opportunity to clarify what the future holds for under-fire diesel cars. If Hammond really was serious about tackling pollution caused by diesel cars, he would have announced incentives around getting older, more polluting vehicles off the road,’ Tisshaw said. He did nothing of the sort, instead focusing on the cleanest, most modern diesels and sparing them tax increases if they meet a certification standard that can’t be tested for until 2020. Fears of tax on diesel cars has seen new model sales plummet in recent months. Sales of diesel cars have plummeted by more than 20 per cent in recent months on the back of consumer fears that these vehicles will be hammered by new toxin taxes and rapidly lose value.
Registrations of alternative fuel vehicles – which include hybrid, plug-in hybrid and electric cars – have been rising gradually, but a lack of choice or compelling financial reasons to choose one mean they only make up around 5 per cent of all new cars being purchased by Britons. Instead, drivers abandoning diesel are opting for petrol, which will result in an increase in CO2 emissions that are heavily linked to climate change. 800,000 company car drivers who will also be stung by a 1 per cent rise in company car tax for driving a diesel car. 20 to tax for the first 12 months. 1,700 – the biggest financial leap of any of the bands.