1 – Tax hike for diesel cars
The government is introducing a temporary levy on diesel cars, in an effort to reduce air pollution and to encourage manufacturers to bring the next-generation of clean diesels to market more quickly.
Starting in April 2018, Vehicle Excise Duty (VED) for diesel cars which don’t meet latest standards will go up one band in their first year, with a flat rate of £140 each year after that.
The existing Company Car Tax diesel supplement is also going up by 1%, which is expected to raise £70 million in the coming year.
Neither charge will apply to next-generation clean diesel cars which meet the Real Driving Emissions Step 2 standard. Drivers of HGVs, vans, and petrol or ULEV cars will also be unaffected by these changes, as will those who have already bought a diesel car.
2 – £220 million Clean Air Fund
The government plans to use the money raised through these tax changes to fund a new £220 million Clean Air Fund. English local authorities with the most challenging pollution problems will be able to use this fund to support people and businesses to adapt to new measures aimed at improving air quality.
Guidance on applying to the Clean Air Fund will be issued early next year and funding will be available from 2018.
3 – Fuel duty rise scrapped
The fuel duty rise for both petrol and diesel vehicles, which was scheduled for April 2018, has been scrapped. This is expected to save a typical driver around £160 a year, and will benefit motorists in general by over £4 billion over the next 5 years.
4 – £540 million pledged for electric vehicles & charging infrastructure
The Chancellor also pledged £540 million towards electric vehicles (EVs), stating that the movement towards electric cars is “a change that needs to come as soon as possible”.
£400 million will fund EV charging infrastructure projects UK-wide, £100 million will go towards helping people buy EVs, while the remaining £40 million will pay for charging research and development.
The law will also be clarified so that people who charge their electric vehicles at work will not face a benefit-in-kind charge from next year.
5 – Tax breaks for North Sea oil & gas sector
From November 2018, The North Sea oil and gas industry will receive tax breaks via the introduction of transferable tax history (TTH), a move designed to encourage investment.
The tax breaks will be provided for old oil and gas fields sold to new owners, who are often deterred from buying the assets due to high decommissioning costs. Under the new rules, current asset owners will be able to transfer some of their corporation tax history onto new buyers, so they can receive tax breaks upon decommissioning.
The Chancellor described it as an “innovative” tax policy, one which “will encourage new entrants to bring fresh investment to a basin that still holds up to 20 billion barrels of oil”.