Diesel VED hike ‘to raise £125 million for AQ measures’

Changes to the Vehicle Excise Duty (VED) rates for diesel cars have come into force from this month (April 2018), under a move first announced by the Chancellor in November.

The changes apply to new diesel cars which do not meet the Euro 6 emissions standard under real-world (RDE2) conditions, and see the vehicles go up one Vehicle Excise Duty band in their first-year rate for any car registered after April 1.

Vehicles which meet the latest vehicle testing requirements will not be required to pay the diesel supplement

Cars which are certified as meeting the RDE2 standard — which will not be mandatory for car makers until September 2019 — are exempt from paying the diesel supplement, provided that they produce no greater than 80mg/km of nitrogen oxides (NOx).

According to the Treasury, as much as £125 million is expected to be raised through the measure in 2018/19, falling to £50 million in 2019/202 and £10 million in 2020/21 – all of which is expected to be used to pay for measures to improve air quality in towns and cities.

For some drivers, the supplement is likely to only add an extra £20 in the first year compared to 2017/18 VED rates, but more polluting vehicles could see tax rates increase by as much as £400 in the first year compared to 12 months earlier.

Zero-emission taxi

Other vehicle tax changes to have been introduced in the Chancellor’s Autumn Budget include changes to the VED for zero-emission capable taxis — which also now apply to any taxis purchased after 1 April 2018.

A passenger boards the TX eCity in London – one of the newest zero-emission capable taxi models on the market

Proposals to offer black cab drivers a tax exemption worth up to £1,550 to switch to a zero-emission capable cab had been expected to come into effect from April 2019, but the Treasury announced last month that the measures would be extended to vehicles registered after 1 April this year.

All cars over £40,000 had been required to pay the charge, which is paid over a period of four years after the first year that the vehicle was purchased. However, the Treasury has confirmed that as VED renewals take place every 12 months, all zero emission capable purpose-built taxis purchased from April 2018 will be exempt from the supplement.

Critics of the VED changes — including the motoring body RAC — have described the measures as a ‘light touch’ and warned that they could discourage some drivers from removing their older diesel vehicles from the road (see airqualitynews.com story).

Scrappage scheme

Despite this, the organisation has welcomed the government’s recent revelation that it would not be proposing to take forward a national scrappage scheme, in response a consultation on additional measures to support those affected by plans to address air pollution — also launched in November (see airqualitynews.com story).

According to the government, any such scheme would be ‘high cost and poor value for money’ as well as being difficult to design and target to the most polluting vehicles.

Responding to the decision, Steve Gooding, director of the RAC Foundation, said: “Devising an effective scheme delivering value for money was always going to be a challenge.

“It’s not enough simply to take some older cars off the road. The pollution caused is not just a product of the age of a vehicle but also where it is driven, when it is driven and how far it is driven.

“Then there is the question of what the scrapped vehicle is replaced with. Ultimately a lot of money could be spent achieving not a great deal.”