Fuel Duty remains frozen at current levels. Despite rumours of an increase on diesel, the easy target on air quality issues, the Chancellor chose not to upset fleet operators and diesel drivers. After keeping the rate frozen at 57.95p since 2010 it is going to be very hard for another Chancellor to ever dare raise it.
Vehicle Excise Duty
First-Year Rates of VED will increase from 1st April 2018 for diesels emitting up to 255gm/km CO2 that do not meet the RDE2 standard. Older diesel cars will fall into a higher VED band so that a 140gm car will pay an extra £300 on registration, rising to an extra £500 for those in the 171 to 255 CO2 bands. (Based on current VED prices, though there will be an increase for inflation). We don't see this as having a huge impact since this will be absorbed in the initial purchase price, and the price of getting a vehicle to meet the RDE2 standard could be greater. However it is still a strong incentive to test vehicles to this new standard and publish the result.
There won't be any impact on company car drivers since VED is not included in the P11d value.
Company car tax
Company car tax structures will remain as previously announced, apart from the addition of 1% to the appropriate percentage for diesel cars from April 2018 that do not meet the RDE2 standard. This will hit most company car drivers and will only work as an incentive to avoid pre-RDE2 diesels for those choosing cars between now and whenever the RDE2 standard becomes prevalent.
Diesels which meet the RDE2 standard will be taxed on the same basis as petrol cars.
A diesel company car driver with a 110 gm CO2 car will now face a 16.7% increase in company car tax in April 2018 instead of the 12.5% increase expected before the latest Budget.
The additional 1% diesel supplement has been added to some parts of the Comcar website, but all the calculations won't be fully updated until noon 23rd November.
What is RDE2 ?
Since September 2017 all new types of cars have to be tested for Real Driving Emissions (RDE) using portable emissions (PEMS) testing equipment over real roads and a target of 80 mg/km NOx. Under Step 1 cars are allowed to go up to 210% of this figure (the manufacturers argued that the test equipment was not accurate enough) and under Step 2 (RDE2) cars must be within 150% (ie 120mg NOx) by 2020.
Some new models have been tested and we will start to identify them if, and when, the information becomes available.
Measurement of CO2
The overview notes to the Budget confirm that Finance Bill 2017-18 will legislate that Company car tax and VED will be based on NEDC equivalent CO2 figures right up to April 2020. It is important to have this made clear. New cars are now beginning to be tested to WLTP standards which are stricter and will tend to produce much higher CO2 figures. By legislating that tax will be based on correlated NEDC figures instead of the new official test figures, drivers can be sure of avoiding the worst of a large potential increase.
There will still be some impact filtering through from the new test regime as the process of testing under WLTP and then converting back to NEDC equivalent (via a program called CO2mpas ) is causing net increases in CO2 figures, though not nearly as much as if we jumped straight to WLTP figures.