UK - The UK Company Car Tax Diesel Supplement 2019/20


The Global Payroll Association would like to highlight a change and how this will impact payroll reporting in 2019/20 and onwards.

In the first place, the Finance Act of 2018 amended the benefits legislation regarding the diesel company car supplement so it applies in different ways (or not at all), all depending on if the car meets the Real Driving Emissions 2 (RDE2) standard.  This was introduced in September 2017 and is described in an HMRC 2017 policy note as below:

The RDE2 standard sets a maximum permitted level of car NOx emissions in real world driving situations, and it is measured through portable emissions-measuring equipment in a variety of real driving trips. Cars must pass the certified level of NOx emissions irrespective of the driving behaviour during the test - for example, the level of emissions produced when an engine is under stress, say, by driving uphill.

The key words are “real world”.  The previous diesel car tests for emissions was not based on real word driving conditions. 

From April 2018

The diesel car supplement was increased from 3% to 4% but employers have to look at the date of registration and whether RDE2 applies to know whether this supplement is to be used.  Perhaps this is best shown in the following table:

 Car

 From April 2019

 Where the car was registered on or after the 1st of September 2017 and meets the RDE2 standard:

  • The diesel supplement is still 0% but the fuel indicator on the P11D and the P46(Car) changes to F
  • If the employer is payrolling the car benefit, the F must be entered into the relevant payroll field on the FPS (field 177)

From September 2018, the RDE2 Euro standard will show on the V5c vehicle registration document.  Also, “Vehicle Enquiry Service” will allow employers to check.

 If it is a RDE diesel car, F and 0% supplement apply.

 The Global Payroll Association wants to point this administrative change out to employers before the start of the new tax year. The letter A applies to RDE2 cars in 2018/19 but is changed to F for 2019/20.