Budget 2017 – New £500 diesel road tax from April next year – but fuel duty remains frozen in victory for The Sun
DIESEL car buyers will be hit with an April tax hike of up to £500 – but drivers avoided a fuel duty raise in today’s Budget.
Chancellor Philip Hammond revealed vehicle excise duty for new diesels that don’t meet standards will rise from April 2018 in an attempt to cut down on air pollution.
The changes will apply to new cars bought after April next year that don’t meet latest emissions standards – while vans are exempt, too.
But in a victory for The Sun campaign, an expected fuel duty hike was cancelled as Hammond froze prices again – saving regular drivers hundreds.
Existing car owners are unaffected, and Hammond said: “No white van man or woman will be hit by these measures.”
Vehicle excise duty (VED) for diesel cars that don’t hit pollution targets will go up one band – adding between £20 and £500 to year one rates depending on how dirty the car is.
After the first 12 months, all cars still face a flat £140 annual fee.
That means any car that hasn’t been through the new Real Driving Emissions (RDE) test introduced this year – which is currently all cars on sale.
By April next year a handful of cars will have been certified through the RDE legislation – but manufacturers legally don’t have to sell cars that standards until September 2019.
It means buyers will likely face the extra tax for almost two years – raising £125m next year for Government coffers.
For example, a 1.6-litre diesel Nissan Qashqai that emits 116g/km of CO2 will jump from £160 to £200 in year one while a 2.0-litre diesel Volkswagen Passat with 144g/km CO2 would leap from £200 to £500.
The diesel supplement on company car tax is also going up by one per cent too – a move that’ll raise £70million next year alone.
Hammond said: “This money will fund a new £220million clean air fund to provide support for the implementation of local air quality plans.”
The fuel duty freeze has cost the Treasury £46billion since 2010 compared with inflation-based rises, Hammond revealed.
CASE STUDY: How the Budget will affect diesel drivers
For mother of three, Lynn James, the increase in car tax, which could add up to £500 on to the first-year rate for diesel drivers, is “the final nail in the coffin” for buying this type of vehicle.
Mrs James, from Knebworth, Hertfordshire, said: “Right now we have a 2012 Ford S-max and drive around 400-500 miles per week for our children’s football, two of which play for Cambridge United.”
Mrs James, who runs the moneysaving blog, MrsMummypenny.com, calculates that the family spends £200 per month – or £2400 a year – on diesel.
The couple have been long considered opting for an electric car and the Chancellor’s announcement is a big motivation to make a change.
“We would never buy another diesel car and this increase in car tax will push us into this decision sooner rather than later,” she said.
On the other hand, the fuel duty freeze is “great news”, said Mrs James.
She added: “An increase at the pump would have been a huge issue for us and that we thought could cost us an extra £15 to £20 per month, so freezing it will tide us over until we buy an electric car.”
It’s a major win for The Sun after we campaigned to freeze fuel duty for hardworking drivers.
And it’s saved the regular driver £830 a year at the pumps – and £2,100 for van drivers.
It also appears that a Government-backed diesel scrappage scheme to rid the road of older, dirtier models has been shelved completely.
Instead, manufacturers have launched their own schemes in a bid to clean up the roads.
Savvy buyers may be able to offset the extra costs by negotiating discounts with dealers looking to shift models.
