Tough new car tax revisions – which could see the duty on some models increase by up to £1285 (AU$2580) – have come into place for petrol and diesel new-car buyers in the UK.
As reported by AutoTrader and The Times, the revisions affect the Vehicle Excise Duty (for personal cars) and Benefit in Kind (for corporate vehicles) taxes that are paid at purchase of a new car. These amounts are based on the vehicle’s projected emissions in the first 12 months of ownership.
From April onwards, electric vehicles will attract zero Benefit in Kind tax as an incentive for company fleets to go electric.
While the rate at which tax is paid on internal combustion engine emissions remains unchanged, the testing method for projected emissions has been updated to ‘World Harmonised Light Vehicle Testing Procedure’, or WLTP standard, from the older ‘New European Driving Cycle’, or NEDC.
WLTP standard – by way of more realistic conditions and driving behaviours during testing – is deemed more representative of actual on-road emissions than NEDC, thus providing higher emission values and increasing the projected 12 month emissions value of new-cars.
The outgoing NEDC method – which had not seen revision since 1997 – has been criticised for allowing manufacturers certain “loopholes” to reduce CO2 emissions during test conditions.
These loopholes include leeway to operate the vehicle at speeds up to 1.2 miles per hour (1.9km/h) slower than required, have lights and air conditioning turned off to reduce parasitic engine power loss and even remove side mirrors to reduce drag.
The new testing method was implemented for the vehicle tax calculation from April 1 for the Vehicle Excise Duty and April 6 for the Benefit in Kind.
While AutoTrader predicts the average tax paid across vehicles will only increase £5 (AU$10), larger SUVs will see considerably greater increases.
The Audi Q5 40 TDI will attract a tax premium of £1815 (AU$3640), up £1285 (AU$2580).
A Mercedes-Benz GLE 300d cops a £750 (AU$1500) increase, taking its Vehicle Excise Duty to £1250 (AU$2500).
These prices mark a 342 and 250 per cent increase for the Audi and Mercedes-Benz SUVs' emissions taxes respectively, compared to those in place just one week ago.
Recently, the US and China relaxed their emissions targets for new cars in the face of the coronavirus pandemic.
In 2019, the Australian government deferred adopting stricter Euro 6 emissions standards and higher quality fuels – that would allow access to more eco-friendly models – until 2027.
The UK adopted Euro 6 emissions standards in 2015, which means Australia will still be roughly 11 years behind by the time our next step change is introduced.