Philip Hammond
Philip Hammond

DELAYS to the announcement on future company car tax runs the risk of contract holders deciding not to renew, and more people opting out of their company car schemes in favour of a less-regulated grey fleet environment.

Ashley Barnett, Head of Consultancy at Lex Autolease, said: “Fleets have a critical role to play in pioneering the newest, cleanest vehicle technology, so it’s important that the knock-on effects of the WLTP transition don’t make company vehicles seem like a less attractive option.

“As we move from New European Driving Cycle (NEDC) values to NEDC-derived and ultimately to the exclusive use of WLTP, vehicles’ fuel consumption and emissions values are effectively increasing, which has tax implications for businesses and individual drivers.

“We look forward to reading the government’s response to the outcomes of the WLTP consultation, and hope that the need to manage the impact of WLTP on Vehicle Excise Duty (VED) and company car tax will be recognised.”

The his budget statement the Chancellor Philip Hammond made no announcement regarding changes to company car tax post WLTP although a written statement from the treasury said a government response will come in the coming months.

The fleet industry has been campaigning for some time over concerns that no action would be taken following the recent WLTP review that was announced in last Autumn’s Budget.

That review concluded in mid-February at looked at the impact that the new emissions testing cycle will have on company car tax and Vehicle Excise Duty (VED) when it is implemented from April 2020.

WLTP is expected to increase most cars’ reported CO2 figures by 10-20%, having an inflationary impact on emissions-based CO2 taxes like CCT and VED.

BVRLA Chief Executive Gerry Keaney emphasised the importance of getting the tax regime right to support the fleet sector: “Like all UK businesses, our sector is waiting with bated breath on the outcome of Brexit, but we must also continue to remind government of the other key issues that matter greatly to our sector.

“Failure to have clarity on a future tax strategy will cause uncertainty for thousands of fleets and company car drivers, which is damaging to both the economy and the environment.

“In our recent meetings with Treasury, Department for Transport, BEIS and Downing Street officials, we have emphasised the importance of getting the tax system right and have made clear what the adverse impact will be on our sector if they fail to address vehicle taxation, particularly relating to WLTP.”

LeasePlan’s head of consultancy, Matthew Walters said: “The new emission testing regime is an important part of the shift to greener motoring. However, its staggered integration into the tax system has created a lot of confusion and concern for fleets and their drivers.

“The use of NEDC-correlated figures, until WLTP figures apply from April 2020 onwards, means that some motorists are facing unexpected tax hikes.

“Thankfully, with the review he announced at last year’s Autumn Budget, the Chancellor has shown that he is listening to the fleet industry’s concerns – although we don’t yet know how he is acting.

“It seems as though the Chancellor – like the Government – has been distracted by Brexit and has had to postpone some of his announcements. Indeed, the WMS feels like a list of things the Chancellor would have rather been focussing on had the spectre of Brexit not been looming large.

“That said, fleets and drivers need confirmation of how the WLTP regime will be dealt with in regards to vehicle and company car taxation as well as capital allowances. We urge Hammond to stick to the commitment he has set out today even though ‘over the coming months’ is a little vague.”

The continued absence of company car tax bands post 2020/21 is an ongoing challenge for fleets, Barnett added.

 “The lack of long-term company car tax tables is holding the fleet market back – we had hoped for an update from the Chancellor today.

“Before fleet decision makers can build a strategy based around the average 48-month contract, and before employees can commit to what is essentially a four-year investment, they need assurance that the associated costs are not going to increase over its lifetime.

“We already know that orders for diesel vehicles are being delayed in case further tax increases are announced that could make them prohibitively expensive.  Similarly, questions remain over the future tax treatment of electric vehicles, which makes it difficult to forecast the cost of transitioning to an ultra-low and zero emission fleet.”

he continued absence of company car tax bands post 2020/21 is an ongoing challenge for fleets, Lex Autolease’s Barnett added.

 “The lack of long-term company car tax tables is holding the fleet market back – we had hoped for an update from the Chancellor today.

“Before fleet decision makers can build a strategy based around the average 48-month contract, and before employees can commit to what is essentially a four-year investment, they need assurance that the associated costs are not going to increase over its lifetime.

“We already know that orders for diesel vehicles are being delayed in case further tax increases are announced that could make them prohibitively expensive.  Similarly, questions remain over the future tax treatment of electric vehicles, which makes it difficult to forecast the cost of transitioning to an ultra-low and zero emission fleet.”

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