Recently, fuel prices have been spiraling sharply in response to escalating demand and diminishing supply. As fuel prices push higher and higher, seemingly setting new record high prices every other month, it becomes more and more reasonable to find other ways to save money on your motoring. As well as the ecological benefits of diesel fuel, you can save significant amounts of money using it. There are several ways this can be done; this guide tells you specifically how and why you can save on your road tax. As part of 2007's budget, the government made it clear that it was encouraging the use of smaller, cleaner cars over big, wasteful petrol cars. It's doing this by offering real incentives to drivers who are more concerned about the environment and dedicated to frugality, and penalising those who are not. The emission figures for your vehicle can be found in the owner's handbook or on the manufacturer's website.
Vehicle Excise Duty Vehicle Excise Duty is more commonly known by its informal name 'road tax'. The government imposes seven tax classes, each with their own rating classifications. For the sake of brevity, this guide will deal only with one tax class: cars registered on or after 1st March 2001, based on CO2 emissions and fuel type. Previously, there were really only two tax classes applicable to cars for personal use, and only two rates. If your engine was under a 1.5 you paid £115 per year, over a 1.5 you paid £180. There are now six, and they're classified on the basis of carbon dioxide emission, regardless of engine size. They're listed in 'bands', Band A - G. Since most modern road cars fall into the first three categories, they will be given special attention.
Band A Band A contains vehicles which emit up to 100g per kilometer. This tax band is exempt from road tax, and exempt from the London congestion charges too. There are no petrol powered cars in this tax band. Aside from electric, alternatively fuelled or custom built cars, there are only two road cars present here; the Seat Ibiza 1.4TDi Ecomotion and the much-hyped Volkswagen Polo Blue Motion 1.4 TDi, without A/C. These two cars (admittedly they're identical underneath, but for the sake of argument we'll refer to them as different cars) represent a diesel-powered hammer blow in the progress of economical and environmentally considerate technology. They deliver the power of a petrol engine of the same size, in many instances outperforming them, yet with unprecedented mileage capabilities and negligible CO2 output.
Band B Tax band B envelopes cars which emit between 101-120g/km of carbon dioxide. This band is taxed just £35 per year, a full £80 saving on the next band, providing a great incentive to invest in a car which falls into this bracket. And there are plenty to choose from. It's this band in which the disparities between petrol and diesel really start to become obvious. There are six or seven petrol engined cars in this band, notably the Toyota Aygo, Citroen C1, and several SMART cars, all of which have a one litre engine or less (except the Fiat 500, which has a 1.2). In comparison, there are around forty eight diesel cars represented in this brand. That's six times the amount of petrol engine cars. But it's the engine sizes which are the most surprising, and the most revealing. The largest petrol engine (and therefore the most powerful) in Band B is the Fiat 500's 1.2. The largest diesel engine is the Audi A3's 1.9e TDi. It's a difference of almost a full litre! The rest of the diesels in Band B average 1.4 to 1.6 litres, and most of the major European manufacturers provide a diesel car in this band. The average petrol engine in Band B is just one litre.
Band C Band C encapsulates the cars which emit between 121-150g/km CO2. This band is charged £115 per year, a steep rise from the previous band. Like the previous band, Band C is much more heavily populated with diesels than with petrols, and the diesels are unanimously more powerful. As a simple demonstration, the most powerful petrol engines in this band are the Mazda2's and the Citroen C3's 1.6 models, the most powerful diesel is Honda's 2.2l i-CDTi Accord engine - almost 25% more power for the same amount of road tax. It's worth mentioning too that the petrol cars in Band C average around 1.0 and 1.4 litre capacity, while the diesels in the same band are littered with 2.0l engines (including a Jaguar X-Type and a 5-series BMW!).
Band D Cars which produce 151-165g/km of CO2 emissions fall into this classification, and can expect to be taxed £140 per year. The average diesel engine in this band is 2.0l, the average petrol is 1.5l, and there are around 30% more diesels than petrols here.
Band E Band E covers cars which emit between 166 and 185g/km of carbon dioxide. This level of emission will result in a road tax charge of £165 per year. This band represents the entry of the more powerful saloons, estates, smaller sports cars, and entry level performance vehicles. The most powerful diesel in this band is the Audi A6 saloon, with its mighty 2.7l V6 TDi, and the majority of diesels here are two litres or above. The vast majority of petrol engines in this band are less than two litres, averaging around 1.7.
Band F Band F sees the first appearance in the road tax classifications of the bigger more powerful cars. Your car will fall into Band F if it produces over 185g/km of carbon dioxide, and your road tax will amount to £205.
Band G Band G is formatted a little differently from the rest of the bands. Band G stipulates that if your car produces 225g or more of carbon dioxide per kilometer and it was registered on or after 23rd March 2006, a year's tax will cost £300. If it was registered before that date, it falls into Band F and is charged £205. This £95 price hike discourages car manufacturers from building highly CO2-productive vehicles. Frankly however, it isn't the most strenuous dissuasion, since car buyers who are able to buy brand new vehicles from Band G are unlikely to be concerned by the £95 difference; Band G contains all of the most expensive and powerful performance cars on the market. Interestingly, this category contains about 130 luxury diesel models, but around 700 petrol models.
Summary The meaning of all this is pretty straightforward. The road tax on diesel fuelled cars is significantly cheaper than petrol on like-for-like engine sizes. 1.6 petrol will invariably be more expensive to tax than a 1.6 diesel, thanks to the low CO2 ouput of clean diesel engines. Diesel engines represent a balance between economy and performance; compromising on neither, excelling on both. When you walk onto the forecourt looking to buy your next new car, consider the implications of the vehicle excise duty. Instead of opting for a 1.6l petrol, switch to the 1.6 diesel. You'll save yourself almost £100 - and perhaps more - before you're even on the road. In fact, if you're willing to invest that £100 in slightly more expensive insurance, you might consider looking at a 2.0 TDi equivalent of that same 1.6 petrol model. It will be more powerful, faster, healthier, more economical and cheaper. For further information on how a diesel car will save you money, check out our 'Economic Running' guide.