Chancellor roadmaps diesel tax review

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Tax treatment on diesel vehicles is set to undergo further changes in the Autumn Budget as the government commits to improving air quality, the Chancellor revealed in the Spring Budget.

The government said that it will “continue to explore the appropriate tax treatment for diesel vehicles” after it has drafted a detailed Spring plan outlining the UK’s air quality goals. Companies and fleets may now have to put their diesel vehicle plans on hold until the government has engaged with the relevant stakeholders ahead of the Autumn Budget.

The government’s air quality roadmap continues the substantial reduction in the benefit in kind on low emission vehicles announced during the 2016 Autumn Statement. As previously announced, the government introduced 11 new bands for ultra-low emission vehicles to be rolled out from 2020 to 2021. The government is also investigating the use of red diesel.

Meanwhile, Hammond’s investment into disruptive technology also continued the government’s drive to make low emission vehicles more attractive. The pledged £270m towards tech such as driverless vehicles and artificial intelligence would also help develop batteries for the next generation of electric vehicles.

Vehicle Excise Duty

Elsewhere Vehicle Excise Duty (VED) for cars, vans and motorcycles will increase from 1 April 2017 by the Retail Prices Index (RPI). Hammond also freezed the VED rates for hauliers and the HGV road user levy from 1 April 2017. An update on the existing road user levy will likely follow after the government will explore the current levy. “The government will work with industry to update the levy so that it rewards hauliers that plan their routes efficiently, to incentivise the efficient use of roads and improve air quality,” the government said.

However, some within the haulage industry was left disappointed that the Chancellor did not use the Budget to tackle the “unfair competition” from EU hauliers. Richard Burnett, the chief executive of the Road Haulage Association demanded a rapid review to stop UK hauliers from being treated as “second class citizens”.

“The Chancellor’s refusal to raise the road user levy with an offsetting reduction in VED is a green light for EU hauliers to carry on attacking our industry and getting away without paying their dues for the upkeep of our road network,” Burnett said.

 

AccountingWEB's Spring Budget coverage is brought to you in association with TaxCalc. Visit our Budget page to keep up with all the predictions, debates and post-Budget analysis.

About Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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17th Mar 2017 11:28

"The government is also investigating the use of red diesel."
Does anyone know where this statement comes from? I can't find the original source.

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17th Mar 2017 13:14

Ford Mustang 5Ltr V8 cost = £38600, official figures: over 5yrs/60,ooo miles, CO2 emissions = 29.5 tonnes, fuel used = 2,885 gallons, Road tax = £2,560.

BMW 520D M Sport cost (inc met paint) = £41,190, official figures: over 5yrs/60,000 miles, CO2 emissions = 11 tonnes, fuel used = 913 gallons, Road tax = £2,270.

Go figure.

The incompetence of this government staggers me.

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to sushi_ginger
18th Mar 2017 00:42

Your criticism would be more sustainable if you included the NOX emissions of the Beamer and also the particulate emissions. Diesel is destined to follow unleaded petrol into the motoring Hall of Shame. It's looking like Clarkson got it right after all.

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to sushi_ginger
18th Mar 2017 00:58

Your criticism would be more sustainable if you included the NOX emissions of the Beamer and also the particulate emissions. Diesel is destined to follow unleaded petrol into the motoring Hall of Shame. It's looking like Clarkson got it right after all. Also, the mpg of the Mustang is a credible 21 mpg. The BMW comes out at 66 mpg which is not credible. I would also like to see the real world NOX emissions compared to the BMW official test results. As an indication, Mercedes small vans are 60 times over the EU legal limit in real world tests while apparently complying with the EU limits in "official" tests. I haven’t seen real world emissions tests for the BMW.

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to oddlyoak
24th Mar 2017 12:57

Your criticism of my criticism would be more sustainable if the government's intentions were to promote petrol versus diesel because of the NOX emissions. This is clearly not their intention because the VED rates apply equally to petrol and diesel cars. My point was that they clearly don't give a damn any more about emissions, hence why there is a flat rate after the first year. They are more interested in punishing success, as their introduction of an additional tax on cars over £40,000 (a totally arbitrary figure plucked out of the air) demonstrates. This government hates hard working people who are successful.

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