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Vehicle Excise Duty (VED) is paid by British drivers with one rate applying in the first year dependent on emissions levels and a flat rate taking effect from the second year onwards.
"From April 2018, the first-year VED rate for diesel cars that don't meet the latest standards will go up by one band," Hammond said on Wednesday in his annual budget statement.
He said the money would fund a 220-million pound Clean Air Fund to support local plans to improve air quality.