Hammond set to slap a £200 levy on new diesel cars in Budget

BUYERS of new diesel cars could face a £200 tax under the Chancellor’s Budget plans.

Philip Hammond is considering the extra levy on all sales of new diesels, in an effort to encourage drivers to purchase less polluting vehicles.

It follows warnings from scientists that diesel vehicles are damaging air quality and causing thousands of early deaths.

Motoring groups fear the Chancellor could hike road tax on all diesels, hitting millions of motorists in the Budget on November 22.

Sources said a tax on new diesels would have the advantage of not hammering existing owners, while still raising significant sums for the Treasury.

A £200 ‘premium tax’ would raise about £250million, depending on how many buyers switched purchases. Mr Hammond could also increase VAT on new diesel sales. In March the Chancellor warned he was examining plans for increasing diesel taxes to tackle air pollution. He said he would ‘explore the appropriate tax treatment’ for the Budget.

Last month a study revealed toxic air pollution breaches global safety limits in 43 of Britain’s largest towns and cities. Research published in The Lancet journal estimated this caused 40,000 premature deaths a year and six million sick days.

Scientists warned dirty air damaged health ‘from cradle to grave’ – exposing tens of millions to the risk of heart and lung disease. The study said the bulk of the harm was being done by diesel emissions, with an estimated total social cost of £22.6billion a year.

Under the last Labour government drivers were urged to switch to diesel vehicles, which produce less carbon dioxide. But the study said this was a ‘key driver’ behind problems caused by other pollutants.

London Mayor Sadiq Khan has imposed a £10 daily charge on the most polluting vehicles. In addition, from spring, diesel drivers who enter a new ultra low emissions zone will face a £12 charge.

Charges could also be imposed on polluting diesels in other towns and cities.

More than 1.3million diesel cars were sold last year. But sales have fallen 15 per cent in the year to October, the Society of Motor Manufacturers and Traders says.

In February Transport Secretary Chris Grayling warned motorists to be wary of buying diesels, saying they ‘should make best endeavours to buy the least polluting vehicle they can’. He added: ‘I don’t think diesel is going to disappear but someone who is buying a car to drive around a busy city may think about buying a low-emission vehicle rather than a diesel.’

Around four in ten cars on British roads are diesel – almost 12million. Earlier this year Environment Secretary Michael Gove announced new petrol and diesel cars would be banned from 2040.

The Treasury did not respond to request for comment.