Diesel supplement to remain in company car tax to 2021

Chester WestAutumn Statement 2015: The government will retain the diesel supplement in company car tax.

There will be a 3-percentage point differential between diesel cars and petrol cars from April 2016 to 2021, when EU-wide testing procedures will ensure new diesel cars meet air quality standards under strict real world driving conditions.

The announcement was made during Chancellor George Osborne’s Autumn Statement speech today (25 November).

The government also announced that it will spend more than £600 million to support the production and take up of ultra-low emission vehicles (ULEVs) between 2015-16 and 2020-21.

Osborne said: “The development and sale of ultra-low emission vehicles will continue to be supported, but in light of the slower than expected introduction of more rigorous EU emissions testing, we will delay the removal of the diesel supplement from company cars until 2021.”

John Harding, employment tax partner at PricewaterhouseCoopers, added: “Employees who have a diesel car through their work are in for a nasty tax surprise.

“They face an unexpected additional tax liability of up to £400 a year from April 2016, just when many were expecting their tax bill for their company car to reduce.”