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

There’s been much confusion and industry resentment over the government’s plan to increase Vehicle Excise Duty (VED) rates for diesels from 2018.

Many motorists may be concerned about the changes to VED bands and how it will affect their pockets and their choice of car. Here’s all you need to know.

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 – 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.

For example, a small supermini can expect to increase no more than £15, but large-engined cars could see first-year rates rise by as much as £500.

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

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 paying the increased first-year rate so you won’t have to worry about the upcoming changes.

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

However, it is 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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