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The Ultimate Guide To Car Diesel Tax

Do you own a diesel car? Is it a Euro 6 compliant vehicle?

If not, it might be time to upgrade to a Euro 6 car or an alternative fuel source, especially if you live in London and are affected by ULEZ (London diesel tax).

The UK government has published plans to tackle air pollution in the UK’s major cities, and diesel cars are in the firing line.

Diesel owners could soon face charges of up to £24 for driving in city centres. The worst polluting vehicles may even face a complete ban.

Here’s everything you need to know about the so called diesel ‘toxin tax’ and diesel emissions:

  1. The diesel tax explained
  2. Diesel tax in the UK [VIDEO]- the toxin tax explained
  3. Why are diesel cars under scrutiny?
  4. How nitrogen dioxide affects health
  5. How particulates affect health
  6. Nitrogen dioxide’s impact on the environment
  7. How does the UK Government plan to tackle NO2 levels?
  8. Which cities will be affected by the diesel ‘Toxin tax’?
  9. The London T-Charge explained
  10. The London D-Charge explained
  11. Diesel car owners under pressure
  12. Help for diesel owners
  13. Is this the end of the road for diesel cars?
Diesel Car Toxin Tax Infographic

The diesel tax explained

  • The UK government has been ordered by the UK courts (twice) and the European Commission (EC) to reduce Nitrogen Dioxide (NO2) levels in the air
  • The EC has sent a final warning to UK for repeated breaches of legal air pollution limits in 16 areas
  • In 2016, 4 in 10 local authorities breached legal NO2 levels
  • High levels of NO2 are attributable to 23,500 premature deaths in the UK each year
  • NO2 is known to cause (or exacerbate) respiratory diseases including asthma and bronchitis
  • Diesel engines are the primary source of NO2 pollution – producing four times more NO2 than petrol engines
  • Particles from diesel engines have also been linked to heart disease and strokes
    39% of cars on the road in the UK run on diesel
  • The UK government is set to introduce ‘clean air zones’ and ‘toxin taxes’ for diesel cars in major cities from 2019
  • These charges could affect up to 10 million diesel cars in the UK
  • When combined with congestion charge, this could make the cost of driving a diesel car in central London £24 per day
  • A scrappage scheme may see diesel car owners offered up to £2,000 to switch to other fuel sources

Diesel Tax in the UK [VIDEO]- The Toxin Tax Explained

Why are diesel cars under scrutiny?

The UK has a big problem with air pollution.

In February 2017, the European Commission delivered a ‘final warning’ to the UK government over its failure to comply with EU air pollution limits for Nitrogen Dioxide (NO2).

16 areas of the UK – including major cities such as London, Glasgow, and Cardiff – were found to have been repeatedly breaching legal limits.

As an example of how extreme the pollution problem has got, in January 2018, it was announced that one of London’s busiest roads hit its annual pollution limit with 335 days left of the year.

UK Areas Breaching Legal EC Air Pollution Limits

The UK government was ordered to publish detailed plans showing how it intends to bring NO2 pollution within legal limits across London and the UK, or face heavy fines.

But this wasn’t the first time that the government had been ordered to tackle NO2 levels.

ClientEarth vs The UK Government

In April of 2015, environmental campaigners ClientEarth took the UK government to the Supreme Court over their ‘ineffective’ plans to tackle air pollution.

The court ruled in ClientEarth’s favour, and the government was ordered to take ‘immediate’ action. The primary focus of the ruling was cleaning up pollution from diesel cars – the main source of high levels of NO2 found in the UK’s air.

While the government did publish proposals, ClientEarth felt they did not go far enough, and took the government to court for a second time.

Again, the court found in ClientEarth’s favour.

In his September 2016 ruling, Mr Justice Garnham stated that:

“The government’s 2015 Air Quality Plan failed to comply with the Supreme Court ruling or relevant EU Directives”
But Aren’t Diesel Cars ‘Cleaner’?
Diesel cars were previously considered to be ‘cleaner’ than petrol alternatives.

Indeed, in 2001, Tony Blair’s Labour government actively encouraged motorists to switch to diesel.

Chancellor Gordon Brown cut car tax for vehicles with lower CO2 emissions.

And as diesel engines produce around 15% less CO2 than petrol engines, many motorists made the switch.

Between 2005 and 2015 the percentage of diesel cars on the road increased from 20% to 37.8%. And by the end of 2016, 39% of vehicles in the UK were powered by diesel engines.

Percentage of Diesel and Petrol Vehicles on UK Roads

But while diesel engines produce less CO2 than petrol, they also produce:

Which was bad news for air pollution. And very bad news for health.

How nitrogen dioxide affects health

In a 2015 consultation document, the UK government revealed that over 50,000 premature deaths in the UK are attributable to air pollution.

And an estimated 23,500 of these deaths are caused by NO2 emitted by diesel engines.

A government report in April 2016 showed that diesel cars being sold in the UK emit six times more NO2 in real world driving than the legal limit in official tests.

The report was based on the findings of a Government inquiry into the Volkswagen diesel emissions scandal.

Breathing in high levels of NO2 inflames the lining of the lungs, reduces immunity to lung infections, and increases the likelihood of (or exacerbates) respiratory problems, including asthma and bronchitis.

Increased NO2 exposure has also been linked to heart rate variability.

How particulates affect health

A recent study by Edinburgh University concluded that toxic particles from diesel exhausts can enter the bloodstream via the lungs. They are so small that they’ve even been found in brain tissue.

They can then remain in the body for months, potentially accumulating inside blood vessels, and increasing the risk of heart disease, strokes and potentially cause cancer.

Nitrogen dioxide’s impact on the environment

In addition to directly affecting human health, NO2 is known to be harmful to the environment.

NO2 contributes to acidification and eutrophication of soil and watercourses, which impacts on wildlife, plant life and biodiversity.

How does the UK Government plan to tackle NO2 levels?

Local authorities have been mandated by the government to introduce ‘clean air zones’ in the UK’s major cities.

While the government’s consultation document sets the timescale for implementation to ‘as soon as possible’ it is expected that these zones will begin operating in 2019, with London’s T-Charge launching in October 2017.

Each authority will have a level of autonomy over the exact details of implementation and associated charges, however, it is anticipated that:

  • Clean air zones will operate in peak periods
  • Diesel and other high polluting vehicles will be liable for a daily charge of around £12.50 when driving in city centres
  • When combined with the congestion charge, the daily cost of driving a diesel car in central London is £22.50
  • The daily charge could affect up to 10 million vehicles in the UK

These charges have been dubbed as a ‘toxin tax’ by the UK media.

Changes to vehicle tax for diesel cars

The Government announced an increase in vehicle tax for diesel cars in its Autumn 2017 budget.

Which cities will be affected by the diesel ‘toxin tax’?

The ‘toxin tax’ is likely to be implemented in all major cities in the UK.

However the 16 areas highlighted by the EC as consistently breaching legal NO2 levels are likely to face particular scrutiny.

These areas are (North to South):

  • Greater Glasgow
  • Edinburgh
  • Newcastle
  • Teeside
  • Kingston Upon Hull
  • West Yorkshire
  • Leeds
  • Greater Manchester
  • The Potteries
  • West Midlands
  • Birmingham
  • Greater London
  • Cardiff
  • Plymouth
  • Southampton

London hit hardest

London motorists, who already pay a daily congestion charge of £11.50 for driving in the city, are expected to be hit particularly hard by a diesel tax in London – sometimes referred to as the ‘toxin tax’.

While most cities will not begin charging diesel owners until late 2018, Mayor Sadiq Khan announced that a £12.50 ULEZ charge, also known as the ‘T-Charge’ came into force in October 2017. When combined with the congestion charge, the total cost of driving a diesel car in central London is now up to £25.00 or more if you drive a diesel van or lorry.

You can check if your car is liable for the ULEZ tax over on Transport For London’s ULEZ vehicle checker.

The London T-Charge explained

As of October 2017, Transport For London and the mayor of London introduced a new charge called the ‘T-Charge’ (officially known as the Emissions Surcharge). It’s also sometimes called the pollution tax for London.

It only kicks in for older, more polluting vehicles driving in central London. Cars (whether petrol or diesel) need to meet the minimum Euro emission standard or drivers need to pay an extra charge on a daily basis.

This charge is in addition to the standard Congestion Charge applicable for Central London and mirrors similar charges applied or planned in other major European cities such as Paris, Madrid and Berlin.

The T-Charge operates in the Congestion Charge zone and is part of London transport’s commitment to help clean up London’s polluted air.

Many commentators expect other major cities to follow London’s lead in the UK, with mayors and councils of other major conurbations expected to observe the success of the T-Charge before rolling out their own charging structures.

The London D-Charge explained

The ‘D-Charge’ is an additional parking tax for diesel drivers in London. Drivers of certain diesel vehicles will need to pay up to £50 a day (around £2 to £2.45 an hour) if they are planning on parking in certain areas of central London. This is around a 50% increase.

That £50 a day figure takes into account a combination of the C-charge, T-charge and new D-charge drivers will have to face.

The D-Charge is currently at trial stage and two of London’s councils, Islington and Westminster, have plans to introduce the tax permanently.

Islington council is preparing to introduce a £2 an hour additional cost in January for diesel drivers, while Westminster City council has already launched a similar scheme that hits drivers of pre-2015 diesel vehicles in Marylebone, parts of Fitzrovia and Hyde Park (parking sub-zones F1 through F6). There are plans to expand the scheme across the borough.

Westminster City council’s trial started in June 2018 and has already shown the number of older, less environmentally friendly diesel vehicles using parking bays in the area drop by over 12%.

How to avoid the D-Charge

The D-Charge only applies to diesel vehicles registered after 1 January 2015, so drivers may wish to avoid purchasing vehicles of this type when searching for a new car.

The charge does not apply to petrol or alternative fuels. If you do own a pre-2015 diesel car then you can save money by finding a parking bay outside of the charge zone.

Diesel car owners under pressure

With the cost of running a diesel car set to rocket, it’s no wonder that many diesel owners in the UK are considering switching to alternative sources of fuel.

And with the ‘VW monkey test scandal‘ revealed in January 2018, car owners are expected to turn their backs on diesel engines even more throughout the year.

At Motorway we have seen a steady increase in the percentage of diesel owners looking to sell their vehicle.

Despite making up just 39% of the vehicles on UK roads, 56% of our enquiries in April 2017 came from diesel owners. On average we are seeing this percentage rise around 1% each month.

Diesel enquiries on Motorway

We also carried out a survey of 750 UK car owners in early 2017, which revealed that 18.9% of diesel owners will be looking to sell their car over the next 12 months, while just 16.1% of petrol car owners will be looking to sell in the same period.

And as supply overtakes demand, it is anticipated that there will be a steady fall in the value of used diesel cars in into 2018. Similar regulations introduced in Germany have already lead to a 19% drop in the average sale price of diesel cars since the scandal.

There are currently around 17 million diesel cars on the road in the UK, with an average value of £7,000. A 15% drop in value would see a massive £17 billion wiped off the combined net worth of the UK’s diesel owners.

Help for diesel owners

The government has been under pressure not to ‘punish’ diesel owners. After all, the rise in diesel ownership was primarily driven by previous government incentives to use diesel.

But as we have already seen, it is highly likely that diesel owners are going to take a double-whammy financial hit:

Firstly in the cost of running their car, and secondly when it comes time to sell.

So what is the government doing to help?

It is expected that the government will at some point in the future announce a scrappage scheme for owners of older diesel cars.

While we don’t yet have full details of exactly what the scheme would entail, it is likely that the primary beneficiaries will be owners with diesel cars that are:

  • over 10 years old
  • registered in pollution hotspots.

How much will diesel owners be offered to scrap?

A previous scrappage scheme in 2009 offered owners £2,000 to change their vehicle, with 50% of the funds supplied by the Government, and the rest from car manufacturers.

It is likely that any new scheme will offer a similar value, although some reports suggest the amount may incentive may increase to a total of £3,000.

In the first year of the 2009 scheme 300,000 drivers in the UK replaced their car.

Is this the end of the road for diesel cars?

There’s no doubt that the ‘toxin tax’ is going to hit diesel owners hard.

The government has to bring down NO2 levels in the UK’s air, and will not be taking half measures. These new costs are coming, and if you are in London, they are coming very soon.

If you own a diesel car which is over 10 years old, it may be worth waiting for details of the government’s scrappage scheme.

If however you have a more recent model, now could be a good time to sell.

Need to understand more about your diesel car’s valuation?

Try these guides and selling pages:

Need to sell your car?

Sell your car online now at Motorway