Brown to abolish diesel discounts

Cheaper tax bills for diesel company cars will be scrapped from January 2006, Chancellor Gordon Brown announced today.

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Cheaper tax bills for diesel company cars will be scrapped from January 2006, Chancellor Gordon Brown announced today.

Currently, diesel engines incur a 3% penalty in the company car tax system unless they meet Euro IV emissions standards.

Brown told the House of Commons that the waiver would be scrapped on January 1, 2006, the date on which all new cars sold will have to meet the tougher standard.

The Society of Motor Manufacturers and Traders (SMMT) reacted with shock to the news, saying the deadline would encourage a rush of diesel registrations up to the end of 2005 and distort the market.

Christopher Macgowan, chief executive of the SMMT, said: ‘It simply doesn’t make sense to remove the waiver in one fell swoop.’

In March 2004’s Budget, Brown committed the Government to keeping next year’s emissions standards for each company tax band into 2006/2007. He said freezing the tax bands would give the Government more time to evaluate the impact of the emissions-based system which was introduced in 2003.

Consult Whatcar.com to see which diesel models avoid the 3% penalty or check the data on the Government’s www.vca.gov.uk website.