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Diesel cars to face higher tax charges

Diesel cars to be hit by new taxes that will be announced in the Autumn Budget on 22 November

Words ByClaire Evans

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New taxes for diesel cars will be announced by the chancellor, Philip Hammond, in the Autumn Budget on 22 November.

The aim of the move is to provide extra funds for improvements in air quality that were unveiled in the Government's Clean Air Strategy in July.

According to a report in the Financial Times, the Government will either raise VAT on diesel fuel or hike up road tax (VED) rates for diesel vehicles.

Find out what the 2017 Autumn Budget means for diesel car owners

Overnight, the Treasury released a statement confirming this, saying: "The Government’s clean air strategy had stated that it would tax new diesel cars differently."

This is the latest of a number of blows to diesel car drivers; it follows the scrapping of cheaper VED for new diesels earlier this year and the Volkswagen Group dieselgate emissions cheating scandal that came to light in 2015.

In London, the T-Charge has also been introduced, adding an extra Β£10 per day to the cost of driving an older pre-Euro 4 emissions standards car into the capital. Elsewhere other cities have announced plans to ban diesels altogether in the future.

Public distrust and concerns about the extra costs associated with diesel cars have already hit sales. Diesel cars accounted for only 39.4% of new car registrations in October - 29.9% down on the same month in 2016.

In contrast, sales of electric and hybrid cars continues to rise – although they still only account for 5.3% of total new car registrations overall, there has been a 36.9% increase in people choosing them in the past 12 months.

So, should you shun diesel?

We consider the background of the diesel engine story and look at the implications for existing owners and those considering buying a diesel.

Why has the Government turned against diesels?

Diesel-engined cars were promoted by successive UK governments for more than a decade because they have, on average, 20% lower CO2 emissions and 20% better official fuel economy than their petrol counterparts. These are important factors in helping to tackle climate change. Drivers appreciated the lower road tax (VED) and company car tax that were applied to diesels and their popularity grew. Today, there are more than 10 million diesel cars on the UK's roads.

However, the Government now needs to address the levels of pollution in our cities because it is being sued by the European Commission for repeatedly breaching air pollution limits. The Government's announcement of the ban on petrol and diesel-engined cars from 2040 is part of a Β£3 billion plan to tackle air pollution in response to the legal action.

The nitrogen oxides (NOx) produced by diesel engines are one cause of air pollution. So, as well as announcing the introduction of extra charges for the oldest, highest-polluting diesels if they’re driven in urban areas at peak times, the Government has changed the road tax banding system for new cars so that, after the first year, owners of petrol and diesel cars will pay the same rate.

How polluting are diesel cars?

Although diesel cars emit more particulates than petrol ones, their CO2 emissions are generally lower. It’s also important to note that older diesels have far higher particulates and CO2 emissions than newer ones.

The first Europe-wide emissions standards, applicable to all new cars registered from January 1993, set an upper limit of 2.72g/km of carbon monoxide (CO) and 0.97g/km of NOx for diesel engines.

Significant improvements were made with the Euro 5 standard that applies to cars registered after January 2011. In order to comply with the limit of 0.18g/km of NOx, diesel-engined cars had to be fitted with diesel particulate filters (DPFs), which capture 99% of all particulate matter before it escapes out of the exhaust.

The latest diesel-engined cars (those sold from September 2015 onwards) comply with Euro 6 regulations and are the cleanest yet. As well as being fitted with DPFs, they have systems that convert most of the NOx from the engine to largely harmless nitrogen and water; for diesel engines, NOx emissions cannot exceed 0.08g/km.

Read more – Euro 1 to 6. How clean is my car?

How has car tax changed?

Until recently, cars with CO2 emissions of 99g/km or less qualified for free road tax. However, from 1 April this year, new rates of car tax were introduced, meaning that only zero-emissions cars costing less than Β£40,000, such as pure electric models, are free to tax. The first-year rate is still dependent on CO2 emissions and ranges from Β£10 for cars with a CO2 output of 1-50g/km to Β£2000 for those with more than 255g/km. After that, a flat rate of Β£140 per year is payable on all cars costing less than Β£40,000.

Hybrid vehicles qualify for a Β£10 reduction in annual fees, but buyers of all vehicles costing more than Β£40,000 (including zero-emissions ones) have to pay an additional annual 'premium car' fee of Β£310 in years two to six. This change only applies to new cars registered on or after 1 April; it doesn’t affect cars registered before that date. So, if you buy such a second-hand diesel car with 99g/km of CO2 emissions, it will still qualify for free road tax.

What other charges do diesel car owners face?

In London, drivers of diesel and petrol cars first registered before 2006 that do not meet Euro 4 standards now have to pay the Toxicity Charge (T-Charge) on top of the Congestion Charge. It is an additional fee of Β£10 payable for vehicles entering the current Congestion Charge zone and is applicable 24 hours a day, every day of the year.

In April 2019, a new Ultra Low Emission Zone (ULEZ) will be created in the capital to replace the T-Charge. Once it’s in operation, drivers of diesel vehicles that do not meet Euro 6 emissions standards and petrol vehicles that do not comply with Euro 4 standards will have to pay an extra Β£12.50 to drive through certain parts of London. It will affect diesel cars registered before September 2015 and petrols registered before 2006.

Other cities around the UK are expected to follow London’s lead with the scheme.

What’s being done to help diesel car owners cope with the extra costs?

Although there will be no assistance with the cost of road tax on new diesel cars, the Government has said it will aim to help owners of diesels living inside the ULEZ and other areas where low-emissions zones are introduced.

There are no official details yet about what form that assistance might take, but it is believed that a diesel scrappage scheme will be introduced to encourage owners to trade in higher-emissions diesels for cleaner models.

What about other European cities?

There are more than 200 low-emissions zones in cities throughout Europe, so if you’re thinking of driving abroad, check for such schemes along your planned route and at the destination.

Paris is among the most recent to introduce a scheme to combat air pollution. Its Air Quality Certificate scheme bans cars first registered before 1997 from entering the city between 8am and 8pm on weekdays. It also bans motorcycles first registered before 2000 and buses and HGVs built before 2001.

Newer vehicles are rated on their emissions and will qualify for one of six different coloured windscreen stickers that will allow access to the city inside the PΓ©riphΓ©rique ring road.

The cost of a sticker is €3.70 (Β£3.20) plus postage and they can be requested via the Air Quality Certification Service.

Next: The best (and worst) electric cars 2017


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