Car tax changes cause confusion for diesel buyers

With new car tax rules coming into force this month, and the introduction of a new emissions test aimed at reducing nitrogen oxides (NOx), there is growing confusion as to which diesel cars are subject to tax supplements, and those that are exempt.

In simple terms, all buyers of new diesel cars on sale in the UK today will be charged a diesel supplement - whether that's in terms of Vehicle Excise Duty (VED) or Company Car Tax.

Under new regulations introduced in September 2017, a number of manufacturers have had some of their model line-ups tested under the new RDE (Real Driving Emissions) test, and certified to 'Euro 6d(TEMP)' standard. This means that the models with Euro 6d(TEMP) on the V5C have passed NOx tests that are tougher than the legal minimum Euro 6 standard. However, although certified as Euro 6d(TEMP), these models will still pay the diesel supplement in both private and business use cases.

Real driving emissions for NOx

In response to the well-publicised failure of the outgoing Euro 6 NOx standard to limit emissions to 80 mg/km for diesel engines, a new test regime has been developed which involves measuring emissions from car driven on real roads. Under the new test, NOx emissions must not exceed limits which are expressed as Euro 6 emission limits multiplied by a so-called conformity factor.

There are two conformity factor phases for NOx emissions: (a) a temporary phase, Euro 6d-TEMP, with a value of 2.1, meaning that vehicles approved under Euro 6d-TEMP can emit 2.1 times the Euro 6 limit; and (b) a final phase, Euro 6d (also known as RDE2), for which the conformity factor is 1.5, the current margin of uncertainty of the PEMS measurement. This means that a Euro 6d diesel car will be able to emit up to (but not exceed) 1.5 x 80 mg/km = 120 mg/km.

The key issue here is that, although some models have achieved the Euro 6d-TEMP standard, none have yet met the full Euro 6d (RDE2) standard, and are therefore not eligible to be exempt from any diesel tax supplements.

For clarity, a document produced by the Vehicle Certification Agency (VCA) states in guidance to manufacturers: "If you are able to identify those cars that are tested to Euro 6d(TEMP) – and so produce less on-road emissions, that would be useful consumer information. Note, however, that Euro 6d(TEMP) cars will not be exempt from the supplement."

It is expected to be at least a year or so for any vehicle to be certified as Euro 6d, whether diesel or petrol; one reason being that not all the details of the test procedure have yet been agreed.

The focus on diesel certification is because it has a direct bearing on how much tax a driver pays. The diesel supplement is applied to the First Year Rate (FYR) for VED, and as such is included in the OTR price for a new car. The supplement effectively sees the diesel car move up a tax band in terms of cost. The diesel supplement for Company Car Tax applies to diesel cars not RDE2-compliant (Euro 6d), which pay a 4% premium over a petrol model with comparable emissions.

More information on VED tax rates and Company Car Tax for diesel cars can be found on the following pages.

NGC's Car Tax microsite

NGC's Company Car Tax microsite

As mentioned, there are no cars on sale at the time of publication that have been certified as RDE2/Euro 6d-compliant. Any that gain such certification will be flagged as such in our database as soon as they are available on the UK market. As such, the results on the NGC Car Tax Calculator & NGC Company Car Tax Calculator, and all other areas where VED and BIK rates are displayed on an individual model basis, will reflect whether a diesel car is or is not RDE2 compliant.

Policy reference: ICCT EU-RDE_policy-update_18012017_vF.pdf

Chris Lilly

Author:Chris Lilly
Date Updated:10th Apr 2018

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