Everything you need to know about the April 2018 diesel ‘road tax’ changes

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Author: | Updated: 25 Feb 2021 11:26

Revised car tax rates came into force on 1 April, meaning that drivers of new diesel vehicles will face higher first-year tax bands.

The change to Vehicle Excise Duty (VED) has many motorists worried about how it will affect their pockets and their choice of car. We explain all…

Everything you need to know about the 2018 diesel VED changes.

What are the changes?

In the government’s Autumn Budget, Philip Hammond announced ALL new diesel cars registered from 1 April 2018 will face a first-year tax increase if they do not meet the necessary standards in real-world emission tests.

The increase only applies to first-year VED rates; the subsequent set annual rate of £140 will not be changed. This means unless you are the first-registered keeper of a vehicle, you won’t be affected.

Essentially, new diesel cars that fail to meet newly introduced Real Driving Emissions Step 2 (RDE2) standards will have their first-year VED rate pushed up a band.

These diesel changes follow on from an adjustment of thresholds for all vehicles in April 2017, which ensured that only zero-emissions cars were exempt, and made diesel and petrol cars more expensive.

Are the changes fair?

Philip Hammond's budget caused a backlash from the automotive industry when he announced the plan.

The change doesn’t apply to any diesel vehicles that are already on the road or already meed RDE2 requirements – they’ll remain in their current tax band. Vans and commercial vehicles are also exempt from the rise.

Given that RDE2 testing is more rigorous than Euro 6 and isn’t set to become the industry standard until 2020, many have called the government plans unfair. It would appear certain cars will be punished for not conforming to a 2020 regulation… from April 2018.

Mike Hawes of the Society of Motor Manufacturers and Traders commented: “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.”

How much will first-year VED for diesels increase?

Because cars that fail to meet the new standards will be pushed up a tax band, the exact increase in cost will depend very much on how polluting the car in question was in the first place.

A small supermini can expect to increase no more than £15, but large-engined cars could see first-year rates rise by over £500.

It's worth nothing that the following rates will only apply to diesels that don't meet necessary RDE2 standards:

CO2 (g/km) Pre-April 2018 first-year VED rate Post-April 2018 first-year VED rate
(for diesels not meeting real-world Euro 6 standards)
1 - 50 £10 £25
51 - 75 £25 £105
76 - 90 £100 £125
91 - 100 £120 £145
101 - 110 £140 £165
111 - 130 £160 £205
131 - 150 £200 £515
151 - 170 £500 £830
171 - 190 £800 £1,240
191 - 225 £1,200 £1,760
226 - 255 £1,700 £2,070
Over 225 £2,000 £2,070

Will it affect lease cars?

Will the VED changes affect the leasing market?

Because the leasing company will be the first-registered keeper of a lease vehicle, it is responsible for the increased first-year rate. So you won’t have to worry too much about directly paying for the upcoming changes – but ultimately it will still cost you money as they are likely to pass that expense on within the contract.

A lease car’s VED is rolled into your monthly payment and is included in the agreement, usually for the duration of your contract.

It is also worth noting that if VED increases during your lease agreement, you might be liable to pay the amount of the increase – it’s always worth checking your contract.

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