Autumn Budget 2017: what tax changes mean to car owners and buyers

Autumn Budget 2017

Electric car drivers are the big winners from the 2017 Budget

Electric car drivers are the winners; diesel drivers the big losers in the Autumn Budget 2017. However, things aren’t as bad as expected for diesel car owners with Chancellor of the Exchequer Philip Hammond rowing back from an anticipated increase in fuel duty. Here’s how drivers will be hit by the announcements made in the Autumn Budget 2017.

No fuel duty rate rises

There were concerns before the budget that the chancellor was going to increase the duty on diesel. The idea would be to encourage drivers to change to petrol, petrol-electric hybrid and electric vehicles instead. However, the fear was the hardest hit would be the millions of ordinary car owners who had bought diesel motors because of tax breaks given by previous governments. He therefore abandoned the idea.

Although UK fuel duty is the highest in Europe, standing at a relatively hefty 57.95p per litre, binning the anticipated rise is believed to have saved the average diesel driver around £160 a year.

How will diesel drivers be hit?

While owners of existing diesel cars got off lightly, future buyers of diesel motors will be penalised. The chancellor explained that from April 2018, car tax (vehicle excise duty) will be increased on new diesels that don’t meet emissions standards. First year car tax for all diesel cars will go up one band. It means that a car emitting 91-100g/km of CO2 will now pay £140 rather than £120 for its first year of road tax. First year tax for a car with 111 to 130g/km of CO2 emissions will rise from £160 to £200.

Which diesel cars will be hit?

Autumn Budget 2017

If that’s a diesel car he’s selling he’ll have to work a bit harder from April 2018

The Chancellor said: “Drivers buying a new car will be able to avoid this as soon as manufacturers bring forward the next generation of cleaner diesels we all want to see.” This increase in tax will only be applied to cars, not to vans or other commercial vehicles. And existing owners won’t be affected.

From April 2018 any car that doesn’t comply with the new Real Driving Emissions (RDE) test regime will pay more tax. That’s all buyers of current Euro 6 diesels. The way cars are tested for emissions changed this year to better reflect how we drive in everyday life. But only newly launched models will comply with the RDE tests and avoid the tax hikes.

Company car drivers

Drivers of company cars already pay more company car tax than petrol-running rivals. The budget announced that they will pay 1 per cent on top of that. That’s a change in the diesel surcharge from 3 to 4 per cent. This money will go towards a new £220m clean air fund.

How electric cars will benefit

The Chancellor sees the future of motoring as being electric and, eventually, driverless cars. In the short term, owners of electric cars that charge them at work will enjoy a tax break: they will no longer pay Benefit in Kind tax. “Our future vehicles will be electric first,” he said. “And that’s a change that must come as soon as possible for the planet.”

Building the electric car infrastructure

The government is going to put aside £400m to fund the electric car charging infrastructure. The Autumn Budget 2017 also set aside £40m for research into charging electric cars. And the chancellor pledged a further £100m to the Plug-In Car Grant which helps drivers cut the sticker price of electric and plug-in hybrid vehicles by as much as £4500.

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