The current diesel supplement, used to calculate the company car tax and car fuel benefit charge, is currently 3% and only applies to diesel cars that do not meet the latest emissions limits.
From April 2018, the supplement will increase from 3% to 4% for all diesel cars that do not meet the Real Driving Emissions 2 (RDE2). The supplement only applies to cars that solely run on diesel and where the car is registered on or after 1 January 1998.
This will have an impact on employers and employees where the employer provides the employee with a diesel company car which is made available for private use. Employers will have a higher national insurance bill and employees, a higher tax bill.
The maximum level of the appropriate percentage for cars including any diesel supplement will remain at 37%.
For example, a company car with a list price of £30,000 and CO2 emissions of 116g/km will result in additional car/fuel benefit of £436 from April 2018. For a higher rate taxpayer this will result in additional for the year of approximately £174.