From April 2018 the company car tax diesel supplement will increase to 4% from 3% for diesel cars that do not meet emission standards, while cars that do meet the standards will have the diesel supplement scrapped
The 1% rise will only apply to cars that do not meet the Real Driving Emissions step 2 standard (RDE2).
This measure also charges company car drivers that do comply with the emission standards at the same appropriate percentage as their petrol equivalent.
The increase will raise £70m for the Exchequer in 2018-19 and £35m in 2019-20. This the drops to a cost of £30m to the Exchequer in 2020-21, before going on to raise £130m in 2021-22 and £90m in 2022-23.
The Fuel Benefit Charge and the Van Benefit Charge will also both increase by RPI from 6 April 2018.
Report by Amy Austin