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Fleets may have to wait for WLTP clarity

Fleets may have to wait for WLTP clarity
12 March 2019
 

Fleets may have to wait beyond the Spring Statement to find out whether the Government will make changes to company car tax and vehicle excise duty (VED).

 

Both were the subject of a review to assess the impact of the Worldwide harmonised Light vehicle Test Procedure (WLTP), which closed last month (fleetnews.co.uk, February 15). 

However, HM Treasury has refused to say whether new rules will be included in the Chancellor’s statement on Wednesday (March 13). Instead, officials would only say the Government would “respond (to the consultation) in due course”.

If changes are required, these would be introduced in the Finance Bill 2019-20, with draft legislation being pub-lished for technical consultation ahead of that. The alternate deadline for an announcement would by July.

The Government has previously indicated that new WLTP CO2 values will be adopted for tax purposes from April 2020.

 

It leaves a matter of months for the Government to act or leave fleet decision-makers and company car drivers facing a possible tax increase.

Initial evidence provided by manufacturers suggests more than 50% of cars will see an increase from NEDC-correlated figures to WLTP of between 10-20%. Fleets have already reported increases of up to 30% between NEDC and NEDC-correlated figures, currently used for tax purposes.

At Budget 2018, the Office for Budget Responsibility (OBR) assumed an increase in revenue for the Exchequer by adjusting the VED and company car tax forecasts from April 2020. It suggested VED receipts will increase around £200 million a year on average from 2020-21 onwards.

Company car tax receipts – through income tax and national insurance contributions – are forecast to increase £100m in 2020-21, rising to £400m in 2023-24.

Fleets have already experienced significant rises. HMRC figures show company car tax revenues increased by more than 24% year-on-year – some £360m – yet the number of employees receiving the benefit fell by 20,000 (fleetnews.co.uk, July 16).

“The Government cannot continue to treat the company car as a cash cow,” said Caroline Sandall, deputy chairman of fleet representative body ACFO.

In its response to the consultation, it has called for Government to realign benefit-in-kind (BIK) tax bands to smooth the transition to WLTP or con-sider a ‘grand-fathering’ of cars registered prior to 2020 to account for the rise in CO2 emissions under WLTP testing.

It also wants the Chancellor to implement the 2% BIK rate for cars with CO2 emission of 0-50g/km immediately and not wait until 2020/21 as scheduled.

Sandall continued: “If the Government is to achieve its ambition to reduce vehicle emissions then it must ensure that the tax regime supports and enhances demand for company cars, the newest and cleanest cars on the roads.”

More than 150 responses were submitted to the Government thanks to a campaign led by the British Vehicle Rental and Leasing Association (BVRLA) and supported by Fleet News.

The BVRLA says failure to support fleet with a fair and consistent tax regime will threaten the Government’s ‘Road to Zero’ strategy.

The association used its submission to remind policymakers of the key role the company car and vehicle rental fleet has played in both buying new ultra-low emission vehicles (ULEVs) and then reselling them into the used market.

BVRLA chief executive Gerry Keaney said: “We need HM Treasury to acknowledge and support the fleet sector’s role (in decarbonising road transport) by providing a fair and well-signposted tax regime.

“WLTP is designed to offer motorists greater transparency. It should not be used as an excuse to boost Treasury coffers. Without making the necessary WLTP-related vehicle tax adjustments, the Chancellor will be simply abusing his position by opportunistically raising taxes and punishing already hard-pressed families and businesses.”

Like ACFO, the BVRLA has called on the Government to ensure future VED and company car tax bands account for the increase in WLTP-based CO2 figures.

 
 
Gareth Roberts
 

Gareth has more than 20 years’ experience as a journalist having started his career in local newspapers in the 1990s. Prior to joining Fleet News in 2008, he worked in the public sector as a media advisor and is currently news editor at Fleet News.