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Car hire firms to operate fleets for longer if Government’s road tax plans go ahead

Car rental firms will be forced to operate their fleets for longer if Government road tax plans go ahead, impacting on the take-up of clean vehicles as well as the new and used car markets.

BVRLA chief executive Gerry Keaney

BVRLA chief executive Gerry Keaney has urged new Chancellor Philip Hammond to defer the implementation of the VED changes

So says the BVRLA as it calls on the Chancellor to rethink the planned changes to the Vehicle Excise Duty regime from next year.

In the 2015 Summer Budget, the previous Chancellor of the Exchequer, George Osborne, announced that a new taxation system will be introduced for cars registered after 1s April 2017. The first-year tax for new cars will still be linked to CO2 emissions, but in subsequent years the tax will be calculated according to the vehicle’s list price.

With the changes set to hit the car rental industry with a tax rise of more than £30m, rental firms have responded by saying they will operate their fleets for longer.

Data supplied to the BVRLA by rental companies suggests this will result in over 29,000 fewer new car registrations by car rental firms next year.

By doing this – instead of purchasing new cars – even fewer modern, clean, safe vehicles will be purchased and put onto the UK’s roads. Furthermore, it will reduce the supply of these nearly-new vehicles into the second-hand marketplace, preventing more motorists from accessing affordable low-emission cars.

Speaking ahead of the autumn statement, BVRLA chief executive Gerry Keaney urged the new Chancellor to defer or phase in the implementation of the first year VED rates.

He added: “Rental companies account for a substantial proportion of new car purchases in the UK, and if these reforms go through, the Government will seriously damage its green agenda and its air quality goals. Many of these cars are ultra-low emission vehicles, and by introducing these VED reforms, the government will be adversely hampering its overall goal to drive the take-up of clean vehicles and improve road safety.”

The proposals will also prevent the industry from claiming £1.67million every year in legitimate refunds. Car rental companies operate the newest fleet on UK roads, and the average rental car is just eight months old. However, from April 2017, rental companies will no longer be able to reclaim the full first year rate of tax on any vehicle they dispose of which emits more than 110 g/km CO2.

Keaney added: “We are calling for these complex refund rules to be removed so that anybody selling their car is fairly entitled to claim back the full amount of unused tax owed to them.”

He concluded that the Autumn Statement “gives the new Chancellor the perfect opportunity to show leadership and signal that he clearly understands the negative impact these changes to the VED system could have on the UK automotive industry”.

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006.