Budget 2017: what it means for diesel

Budget 2017: what it means for diesel
Budget 2017: what it means for diesel

While Chancellor Philip Hammond focused on the more than £500 million investment in pushing electric car use, for many drivers his plans for diesels had been causing far more concern in the weeks leading up to yesterday’s Budget.

So what does the Budget mean for diesel drivers?

As predicted, Mr Hammond announced changes to tax on diesel vehicles. However, they did not go nearly as far as some had feared.

There’s no additional charges on second-hand purchases and people who already own a diesel car will not face any new charges but from April 2018 there will be a “supplement” on the first-year VED rate for diesel cars.

This means that for any car that does not meet the latest Euro 6 standards under the Real Driving Emissions Step 2 (RDE2) standards will move up one tax band. This could add between £20 and £500 to the first year duty on a cars and given the timetable for the roll-out of the standards the Government itself says: “It is likely that few, if any cars, cars will meet RDE2 standards in 2018 to 2019.”

Mr Hammond said that the change would not apply to “next-generation clean diesels” which meet RDE2 and it would encourage manufacturers to bring these to market quickly.

“It’s unrealistic to think that we can fast-track the introduction of the next generation of clean diesel technology which takes years to develop, in just four months”

Mike Hawes, SMMT

The money from the rise in VED will go to a £200m fund to support air quality improvement programmes.

He also announced a rise in the existing company car tax diesel supplement from three to four per cent. This will also apply only to diesel cars which do not meet the RDE2 standards and is expected to affect around 800,000 company car drivers.

The changes only affect cars, leaving, as Mr Hammond put it “white van man or woman” unaffected.

‘Mixed message’

While the change to taxes is minor compared to what some feared there have been warnings that it sends out a ‘mixed message’ over diesel and might encourage owners to hang on to older, more polluting vehicles for longer.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders commented: “Manufacturers are investing heavily in the latest low emission technology, however, it’s unrealistic to think that we can fast-track the introduction of the next generation of clean diesel technology which takes years to develop, in just four months. This budget will also do nothing to remove the oldest, most polluting vehicles from our roads in the coming years.”

The RAC’s Pete Williams warned that while they had escaped any new charges under the Budget drivers of older diesels “will need to keep their eyes on local authorities who may be introducing clean air zones in the near future”.

“The side effect of today’s announcement however might be that it might encourage some to stay with their older diesel vehicle,” he added.

Fuel duty freeze

It had been thought that Mr Hammond might use this Budget to end the eight-year freeze on fuel duty, possibly specifically targeting diesel. However, he decided against this and announced that fuel duty on petrol and diesel will remain at 57.95p per litre – still one of the highest rates in Europe. Fuel duty on LPG has also been frozen

The RAC’s Pete Williams said: “We welcome the news that the Chancellor will freeze duty again this year.

“Drivers already contribute more than £27bn a year to the Treasury from fuel duty receipts, and we’d have liked to see the Chancellor commit to no further rises this Parliament. Perhaps he should now consider doing away with the threat of the fuel duty escalator – that looms over private drivers and businesses before every annual Budget – for good.”

 

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