Approximately 800,000 employees who drive a diesel company car will pay more benefit-in-kind tax, according to the government as a result of its decision to increase the existing company car benefit-in-kind tax supplement from 3% to 4% from April 6, 2018.
Chancellor of the Exchequer Philip Hammond made the announcement in this week’s autumn Budget Statement explaining that the take hike would help to pay for air quality improvements with transport emissions one of the biggest contributors to pollution.
The rise from 3% to 4% applies to all diesel cars (not hybrid diesels) registered on or after January 1, 1998 that are not certified to the new Real Driving Emissions 2 (RDE2) standard.
The government admits that “few, if any cars, cars will meet RDE2 standards in 2018 to 2019”. The measure removes the diesel supplement altogether for diesel cars that are certified to the RDE2 standard.
The government says that 350,000 company car drivers per year replace their vehicles, so within a few years, most affected drivers would have had the opportunity to choose new models not subject to the supplement.
The government calculates that drivers of a BMW 3 Series (CO2 emissions 111-130g/km) will see tax bills rise in 2018/19 by £60 (basic rate taxpayer) and £120 (higher rate taxpayer), a BMW 6 Series (CO2 emissions 131-150g/km) by £125/250 and a Ford Focus (CO2 emissions 91-100g/km) by £43/£86.
•As part of the government’s focus on improving air quality - and in addition to the rise in the diesel company car tax supplement - a Vehicle Excise Duty supplement will apply to new diesel cars first registered from April 1, 2018, so that their First Year Rate will be calculated as if they were in the VED band above.