Find out about new car tax rates that punish new diesel car buyers

There’s every chance you aren’t aware that you may have to pay up to £520 more in car tax from this month. When Confused.com asked drivers, nine out of 10 (87 per cent) weren’t aware of the changes to car tax rates that hit new-car buyers from April 2018.

The latest Vehicle Excise Duty (VED) is levied on new diesels as the government attempts to deter drivers from buying them. Read on to find out if you’ll be affected.

What are the changes from this month?

Drivers buying a new diesel car from April 2018 could find their motor sits one car tax band higher than previously. This is only for the car’s first year. This applies to cars that don’t meet the Real Driving Emissions (RDE) 2 standard for Nitrogen Oxide emissions. The cleanest of the effected cars, those in the 75-90g/km of carbon dioxide bracket, will see year one VED increase by 19 per cent from £105 to £125. However, drivers of new cars with big engines could see their car tax up by 42 per cent from £1240 to £1760.

Is the car you’re thinking of buying affected?

Real Driving Emissions is the new way to measure cars’ exhaust emissions. It is deemed to be more accurate than the New European Driving Cycle it will replace. Currently there are no cars on sale that meet RDE2 standards; new cars that do are unlikely to start appearing in showrooms until 2019. But the government wants all new cars on sale by January 2021 to be RDE2 compliant.

Which cars are affected?

The Peugeot 208 1.6 BlueHDi is the cleanest car to be hit. It produces a mere 78g/km of carbon dioxide (CO2). From April 2018, the cost of taxing it will increase by 19 per cent, from £105 a year to £125. A 42 per cent increase will hit buyers of bigger motors such as the Range Rover, Land Rover Discovery, Audi SQ7 and even the £28,000 SsangYong Rexton SUV.

Is this for the life of the car?

These changes are only for the first year of the car’s life. After year one, new car tax reverts to the system that started in April 2017. All conventional petrol or diesel cars pay £140 a year. Cars that cost more than £40,000 a year must pay an extra £310 a year for years two to six.

What about new petrol cars?

It’s diesel cars the government really wants to hit. New petrol models fall into the same class as RDE2 diesel cars. That means they will continue to pay tax in the existing bands.

What if you’ve got an older car?

If your car was registered between 1 March 2001 and 31 March 2017 – the majority of us ‑ happy days! Your car will pay vehicle tax based on the CO2 figure on its V5C registration document. That means an older car, with equivalent CO2 emissions to the Range Rover or Land Rover Discovery above, will pay £290 a year. That’s just 16 per cent of the tax owners of a new model would pay.

Will this have an effect on new diesel sales?

Drivers will have some serious sums to do. Will the money they save on fuel by running a diesel car outweigh the extra they will shell out in tax? The higher the mileage, the more likely it is a diesel will still make sense. But when Confused.com asked drivers if they’d still buy diesel, three in five said they wouldn’t buy a diesel next because of the tax.

Sales of new diesel cars are already down. In March 2018, diesel sales fell by more than a third (37 per cent) compared to the year before. However, there has been no significant impact on used diesel car sales. Experts say these are more than matching petrol sales at second-hand dealerships. And while petrol sales are down by nearly 5 per cent so far this year compared to 2017, diesels are only down by 3 per cent.