After releasing his Spring Budget, the Chancellor of the Exchequer, Phillip Hammond, outlined the new tax rates that will be in force from 1st April 2018 for new and used cars. The biggest affected car owners will be anyone with a diesel or thinking about buying a new diesel.
Any diesels that don't meet the latest Real Driving Emissions (RDE2) rules will have their first-year tax calculated as if they were in the VED band above from 1st April 2018. Currently, no new diesels meet the RDE2 standard, largely because these rules are not mandatory in Europe until 2021.
On average, these new rules will result in tax increases of £40 a year and for most car buyers, the increase will be in the tens of pounds and not the hundreds. The cars facing the most significant tax rises will be the most polluting ones with an increase of up to £510 on the first year.
VED bands and tax rates for cars registered on or after 1 April 2017:
|CO2 Emissions g/km||Standard Rate (Year 2 onwards)||First Year Rate||First Year Rate Diesel Vehicles*|
VED band and rates for used cars registered on or after 1 March 2001 but before 1 April 2017**:
|Tax Band||CO2 Emissions g/km||Standard Rate (2017-2018)||Standard Rate (2018 - 2019)|
*Applies to diesel vehicles that do not meet the real driving emission step 2 (RDED) standard.
**Cars with a list price of over £40,000 when new pay an additional £310 per year on top of the standard rate, for the first five years before returning to the rates listed above.