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THE Leasing Broker Federation has taken up members’ concerns with HM Treasury about delays in vehicle deliveries in March which have left thousands of broker customers facing increased monthly lease costs, BiK and Class 1A National Insurance payments.

Due to the COVID-19 pandemic, all deliveries due to take place after 22nd March did not occur and therefore vehicles that should have been registered in March under the old VED Tax rules will only be registered once dealerships start to re-open meaning they will fall into the new VED tax bands introduced on April 1.

Brokers have voiced their concerns to the Leasing Broker Federation which has made representations to HM Treasury to consider dispensation.

Some brokers are having to re-quote thousands of cars with average price increases of between £300 and £400.

The Government has so far said there are no plans to delay the introduction of WLTP due to the outbreak of Covid-19.

Orders are generally higher in March ahead of any tax changes as well as being an important ‘plate-change’ month.

The industry has also been hit hard by the pandemic with just 4,000 registrations during April, the lowest monthly figure in 75 years

The Leasing Broker Federation has this week contacted a number of members and business said it is having to requote more than 1,000 proposals and has already had 150 cancellations.

Graham Prince, Leasing Broker Federation Relationships Director, said: “We have contacted a number of members who informed us that they are all experiencing the same dilemma of having to re-quote hundreds of orders through no fault of themselves and then have no option but to hope that customers will accept these price increases.

This Industry is regulated by the FCA and has ‘treating customers fairly’ at the forefront of  business processes and in expecting customers to accepted these increases is clearly not in the spirit of this standard.

“The Leasing Broker Federation would hope that a window of up to 21 days would be granted by HM Treasury once dealers open up and vehicle deliveries are able re-start, in order that regulated customers and businesses caught up in this situation are not financially affected. 

“This suggestion, if adopted, would protect the customers, dealers and brokers and a short enough period to protect HM Treasury.”

One broker told the Federation it has 250 vehicles affected with an average price increase of £400 which will add £10 a month to a contract. Other brokers said customers are either cancelling or complaining because of the added impact in BiK and Class A NIC contribitions.

HM Treasury has responded to representations from the Leasing Broker Federation, but so far it has not moved its position.

A spokesman said: “To provide reassurance, the switch to WLTP only impacts first year VED, so subsequent liabilities will be the same as for those new cars registered before and after 1 April.

“Vehicles registered under the newer, more stringent emissions test, will typically only see a small change in liability as a proportion of total purchase price.

The spokesman added: “The introduction of the Worldwide harmonized Light vehicles Test Procedure (WLTP) strengthens the link between the vehicle tax system and the true environmental impact of car purchasing decisions, allowing consumers to make more informed decisions between model variations.”

WLTP was introduced because it provides more realistic testing conditions and being more rigorous, they give higher g/km CO2 emission levels than under NEDC.

From April 2020, the amount of car tax due is calculated using WLTP standards, so cars are recording higher emissions and so liable for more tax.

The Treasury spokesman added: “The Government announced company car tax (CCT) rates for three years from 2020-21. For cars first registered from 6 April 2020, most CCT rates have been reduced by 2 percentage points (ppt) in 2020-21 before returning to planned rates over the following two years – increasing by 1ppt in 2021-22 and 1ppt in 2022-23.

“To accelerate the shift to zero emission cars, all zero emission models pay no CCT in 2020-21, 1% in 2021-22 before returning to the planned 2% rate in 2022-23.”

The 2020 VED rates can be found here.

The Leasing Broker Federation will continue to lobby HM Treasurer and if any members want to tell us about their experiences they can contact chris.wright@businesscarmanager.co.uk or graham.prince@businesscarmanager.co.uk

 

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