We all remember the Vehicle Excise Duty (VED) Reform that came into effect from 1 April 2017. However, have you taken the time since to realise the impact of such changes by undertaking a full fleet review?
With the new changes came stricter thresholds for £0 tax to apply only to zero-emission cars, a flat rate subsequent rate of £140 and a supplement charge of £310 per year for cars with a list price of over £40,000. To recap, visit Our Guide to VED Road Tax 2017.
What’s new for 2018?
In November last year, it was announced that there will be a higher diesel VED rate applied to any diesel car that does not meet the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions, under the new real-world emissions testing*.
The new higher diesel rate comes into effect for new diesel cars registered from 1 April 2018.
This is part of the government’s nationwide plan for reducing nitrogen dioxide emissions and raise funds for future clean air initiatives.
FIGURE 1: The table below illustrates the new Diesel VED charging (in blue), alongside VED rates for all other fuel types:
Diesel | Diesel cars that meet RDE2 standard* and Petrol | Alternative Fuel | Electric |
|||||
|---|---|---|---|---|---|---|---|---|
| Emissions (g/CO2/km) | FYR | SR | FYR | SR | FYR | SR | SR | |
| 0 | £0 | £140 | £0 | £140 | £0 | £130 | £0 | £0 |
| 1-50 | £25 | £140 | £10 | £140 | £0 | £130 | - | - |
| 51-75 | £105 | £140 | £25 | £140 | £15 | £130 | - | - |
| 76-90 | £125 | £140 | £105 | £140 | £95 | £130 | - | - |
| 91-100 | £145 | £140 | £125 | £140 | £115 | £130 | - | - |
| 101-110 | £165 | £140 | £145 | £140 | £135 | £130 | - | - |
| 111-130 | £205 | £140 | £165 | £140 | £155 | £130 | - | - |
| 131-150 | £515 | £140 | £205 | £140 | £195 | £130 | - | - |
| 151-170 | £830 | £140 | £515 | £140 | £505 | £130 | - | - |
| 171-190 | £1,240 | £140 | £830 | £140 | £820 | £130 | - | - |
| 191-225 | £1,760 | £140 | £1,240 | £140 | £1,230 | £130 | - | - |
| 226-255 | £2,070 | £140 | £1,760 | £140 | £1,750 | £130 | - | - |
| Over 255 | £2,070 | £140 | £2,070 | £140 | £2,060 | £130 | - | - |
FYR = First Year Rate; SR = Subsequent Rate
What counts as Alternative Fuel?
Gov.uk outlines that alternative fuel vehicles include:
- Hybrids
- Bioethanol
- Liquid petroleum gas
Are vans affected?
No. VED is only applicable to cars and some types of motorhomes. For more information on whether your motorhome applies, visit gov.uk.
Has the £40,000+ surcharge been affected?
No, vehicles that have a ‘list price’ (the published price before any discounts) of over £40,000 will pay an extra £310 a year, on top of the Subsequent Rate. They must pay this rate for 5 years from the second time the vehicle is taxed i.e. the first time you pay the Subsequent Rate.
The table below the Subsequent Rate for vehicles with a list price over £40,000, broken down by fuel type:
| Fuel type | SR for first 5 years | SR Year 6+ |
|---|---|---|
| Petrol and diesel | £450 | £140 |
| Electric | £310 | £0 |
| Alternative | £440 | £130 |
What does this mean for fleets?
VED is not usually the deciding factor for company car drivers as it has no bearing on how much company car tax they will pay. However, because VED is absorbed into the monthly rental amount it may push your next car choice into the next band or break your monthly spend limit.
For Fleet Decision Makers, the new diesel supplement charge is yet something else to consider when deciding ‘which vehicles best suit my fleet?’. A question that is becoming more problematic to answer.
Initially, we encourage all decision makers to review their current diesel car banding. Check if the new VED rates pushes certain cars into the next band and advise their drivers accordingly.
But looking further ahead, if you haven’t already, you should be undertaking a full fleet review exercise to understand how other ‘anti diesel’ legislation could be impeding the performance of your fleet.
For support in reviewing your current banding or undertaking a full Fleet Review, contact us on:
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