A growing number of diesels now comply with RDE2 legislation and so avoid the 4% BIK tax surcharge
It’s fair to say the government’s approach to taxing company cars can be confusing. From yo-yoing tax rates for EVs to an on-off relationship with diesel power, fleet managers and drivers can find it hard to fully understand the long-term tax impact of their choices.
Despite the negative rhetoric, and the 4% BIK surcharge, diesel fuel remains the most sensible choice for a great many business users. Good fuel economy and low carbon emissions make diesel especially well suited to high-mileage driving.
However, not all diesels are created equal, and certainly not in the eyes of the taxman. That 4% surcharge, which may nudge some drivers in the direction of an efficient modern petrol, hybrid or EV, doesn’t apply to diesel-engined cars that meet the latest RDE2 emissions standard (see panel).
HOW CLEAN MUST A DIESEL BE TO MEET RDE2 STANDARDS?
RDE2 stands for Real Driving Emissions Step 2. As the name implies, it’s the second iteration of the RDE test, introduced alongside the World harmonised Light vehicle Test Procedure (WLTP) in 2017.
To make it harder for manufacturers to build cars that achieve emissions standards in a lab, but are far more polluting in real-world conditions, the RDE road test is used to check the results of the WLTP tests, which allow NOx emissions of 0.08g/km for diesels.
Cars don’t have to meet exactly the same standard to pass. Under RDE Step 1, vehicles can emit 2.1 times the permitted level of NOx and still be certified. RDE2, which comes into force in January 2020 for new-to-market cars and January 2021 for all new vehicles, reduces the permitted level to 1.5 times that which must be achieved in the lab.
The standard is of fiscal as well as environmental interest for business drivers, as cars that meet RDE 2 avoid the 4% BIK surcharge for diesels.
DIESEL CARS THAT MEET RDE2
E-Pace 150PS manual FWD
XE 180PS auto RWD
XF & XF Sportbrake 163PS manual/auto RWD, XF 180PS manual RWD, XF & XF Sportbrake 180PS auto RWD
Evoque 150PS manual FWD
Discovery Sport 150PS Manual FWD
A200d, A220d, B200d, B220d,
CLA 220d, GLC 220d, GLC 300d,
GLE 350d, GLE 400d, GLS 400d
BMW 116d (September)
VAUXHALL Astra (November)
Although RDE2 doesn’t become a requirement for new designs until next January, and then January 2021 for all newly registered models, manufacturers can already certify to the higher standard. Some are already doing so, and many more will follow over the next few months.
Mercedes-Benz was one of the first manufacturers to offer RDE2-compliant cars, comfortably beating its biggest rivals, Audi and BMW, to the punch. Indeed, there are 10 Mercedes-Benz model variants that already meet RDE2.
“Those manufacturers that make the RDE2 grade will have a huge commercial advantage”
Avoiding the 4% surcharge can make a significant difference to the BIK bill that a vehicle attracts.
Take the RDE2-compliant Mercedes A200d AMG Line. This 150hp diesel model has a P11D value of £30,180. With CO2 emissions of 110g/km, it sits in the 26% BIK band for 2019/20.
Compare that with the Audi A3 Sportback 35 TDI S tronic Sport. Its P11D value is £29,420, and it emits 117g/km. However, because it doesn’t meet RDE2 it sits in the 31% BIK bracket.
That means choosing the Merc over the Audi leads to a BIK saving of over £509 for the current tax year. That’s a big enough difference to strongly influence a user-chooser’s decision.
JLR is also ahead of most rivals with its RDE2-compliant diesels, and has seen a big uplift in orders. “Fleet and business channel orders have more than doubled from around 15% to around 33% since we opened the order books on the Evoque D150 FWD,” a Land Rover spokesperson says. “Currently 44% of Evoque fleet and business orders are for D150 FWD.”
Some of those orders might have gone to other models in the range, but some would surely have been destined for other brands. It won’t be long before other manufacturers reach the RDE2 standard, not just because of the potential sales uplift, but because they will have to. All completely new models will need to be RDE2-compliant from January next year, and the standard will be required across the board 12 months later on new cars.
BMW will start to catch up when the 2020 1-Series arrives in September, as the 116d model will be RDE2-compliant. As for other models, BMW says: “There will be a staggered roll-out of this technology across the range but the full model range will be compliant ahead of the required deadline.”
Vauxhall is also about to launch RDE2-compliant diesels, starting with the new Astra range (see test drive, p30). All diesel models will meet the standard from launch, with first deliveries expected in November.
Audi is more vague, saying that RDE2 diesels will arrive “within the next 12 months”. Other manufacturers are similarly elusive when asked about specific dates and models, beyond confirming that they will meet the standard when required to do so.
But so long as there’s a mixture of diesels that hit and miss RDE2, those which make the grade will continue to have a significant commercial advantage.