No new car on sale next year will meet ‘impossible’ budget tax exemption

Car companies will find it impossible to sell cars that are exempt from the new diesel tax rules announced in last week’s budget, says Autocar.

In Wednesday’s Budget, Chancellor Philip Hammond announced that diesel cars that don’t meet a certain standard by April next year will go up by one tax band.

But the new standard, called Real Driving Emissions Step 2, is not due to be introduced until 2020, meaning that manufacturers have only just started working on the technology required. Even if cars do meet the required emissions limits, the certification for RDE2 does not yet exist, making it impossible to prove that any car is exempt.

This means that, as well as a potential extra cost of £500 per motorist, the Budget announcement has caused mass confusion in the UK’s £77.5 billion car industry, with car makers unable to comment without seeking further clarity from the Treasury.

RDE2 is the second phase of a series of real-world emissions tests; the first stage was introduced in September, replacing laboratory tests that gave a skewed picture of the pollutants produced by vehicles.

“The chancellor had an opportunity this week to clarify the road ahead for diesels, both for motorists and the car industry,” said Autocar editor Mark Tisshaw. “But instead, he has created enormous confusion with a ruling that makes no sense.

“If Hammond really was serious about tackling pollution caused by diesel cars, he would have announced incentives around getting older, more polluting vehicles off the road.

“He did nothing of the sort, instead focusing on the cleanest, most modern diesels and sparing them tax increases if they meet a certification standard that can’t be tested for until 2020.”

Sales of diesel cars have bombed more than 20% in recent months due to consumer uncertainty over the future of diesel vehicles.

Meanwhile, with a lack of choice or compelling financial reasons to choose electric or hybrid cars, drivers abandoning diesel will instead opt for petrol, predicts Autocar. This will result in an increase in CO2 emissions.

The new tax rules could hit nearly three million motorists from next April – two million new car buyers, plus a further 800,000 company car drivers who will also be stung by a 1% rise in company car tax on diesels.