From the fuel duty freeze to electric vehicle investment, here’s how the 2017 budget will impact motorists.
Last week saw Chancellor of the Exchequer Philip Hammond exiting No. 10 Downing Street brandishing the iconic red briefcase, and that can only mean one thing: the new budget. This year saw a lot of rumours regarding fuel duty increases on diesel, and while these changes have fortunately been stalled, for the time being, there are a few policies that will have an impact on drivers in the coming year.
Changes for Diesel
Diesel has taken quite the beating this year. From health concerns regarding emissions to several local authorities setting out plans to ban them all together, there’s no wonder the diesel car market is down. And while the feared fuel tax increase on diesel has not come to pass, the price tag on diesel cars has gone up in other areas in the 2017 budget.
The major change is the shift in VED (better known as Road Tax) band for new diesel cars registered from April 2018, meaning owners will pay more in the first year than at the current level. The change in tax for the first year will only apply to cars that do not meet the new RDE criteria, which will be based on real-world testing, as opposed to laboratory testing. However, the new testing standards do not become a legal requirement until 2021, meaning drivers will be paying a premium while manufacturers rush to catch up with this new schedule. Commerical vehicles will be exempt from the changes. The table below lays out the changes.
|CO2 emissions (g/km)||Current first year VED rates||First year VED rates for diesel cars bought from April 2018 not meeting real world Euro 6 Standards (RDE)|
The VED changes to diesel cars in the 2017 budget have been met with criticism by the motoring industry. Mike Hawes, the boss of the UK’s Society of Motor Manufacturers and Traders, labelled the government’s attempts to accelerate the introduction of new diesel technology in this way as unrealistic. He went on to point out that this legislation only targets new, cleaner diesel vehicles, while the older models which are ones worsening air quality and impacting health the most will be unaffected. He argues that the tax increase will simply discourage people from trading in their old cars.
Diesel company cars have also taken a hit in the 2017 budget, with company car tax increasing from 3% to 4% for vehicles not meeting the RDE criteria.
Electric Vehicle Investment
Following on from the announcement that diesel and petrol new car sales will be banned in the UK in 2040, the government has announced investment plans to help get the country electric ready for the 2040 deadline. Hammond announced a planned investment of £400 million into the electric car charging infrastructure, as well as allocating £100 million to the plug-in car grants, extending it until 2020.
The Chancellor stated that, “our future vehicles will be driverless, but they’ll be electric first. That’s a change that needs to come as soon as possible.”
The investment injection into the charging infrastructure has been welcomed industry-wide. Head of Nissan Europe’s electric vehicle division praised it as a much-needed boost to help consumers embrace electric vehicles.
Taxi drivers have also been given the incentive to make the switch to electric in the 2017 budget, with electric taxis being granted the same supplementary VED charge exemption as diesel taxis, taking electric cabs out of the luxury car tax bracket.
Not wanting to put all their eggs in one basket, the government has also announced £500 million investment into the wider tech industry. This has freed up £40 million for research and development of electric and autonomous cars. It’s clear the government is keen on seeing driverless vehicles succeed in the UK, stating that they want “to see fully self-driving cars, without a human operator, on UK roads by 2021.”
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