Cars that avoid the 4% Diesel Surcharge Tax

In a world of new acronyms and ever shifting government re-categorisation of CO2 and NOx bands, there has never been a more important time to make sure the model, and more importantly specification of the company car gives the optimal tax outcome.

In 2018/19 the government increased the diesel surcharge, branded ‘Diesel Tax’ as a move to tackle air pollution, which is now set to rise to 4%. This is also in conjunction with the Worldwide Harmonised Light Vehicle Test (WLTP). The WLTP is based on real-driving data, designed to better match on-road performance. This also introduced the on the road Real Driving Emissions (RDE) test, to provide much more ‘real-world’ figures compared to the normal lab tests and to push for stricter Nitrogen Oxide (NOx) emission targets, which has meant the CO2 emissions of new vehicles have risen for the second year in a row.

The 4% diesel surcharge applies to all models that don’t meet something called Real Driving Emissions 2 (RDE2). Starting from January 2020 all vehicles will have to beat the RDE stage 1 (RDE1) NOx target, with the stricter stage 2 (RDE2) target due in January 2021. This will require all manufacturers to retest their model ranges, potentially leading to further impacts .The RDE1 is for the new Euro 6 diesel engines, known as 6.2 and have a NOx limit of 168mg/km, with the RED2 engines, known as 6.3 a NOx figure of 120mg/km or less.

There have been a large number of vehicles from prestige marques now boasting RDE2 compliant engines already, but buying a vehicle on a 3 year lease would mean it would be caught by the law in 2021, so be careful on any imminent diesel purchases, as an RDE2 compliant vehicle now will save the surcharge in the future.

If you would like to discuss this blog in more detail please email Paul Locker or call us on 01772 821 021.