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Government shelves WLTP tax decision

The Government has failed to shed any light over future company car tax (CCT) rates, including any action to mitigate the effects of WLTP, in today’s Spring Statement.

The fleet industry has been urging for a fair approach to the treatment of CCT and VED following the introduction of WLTP

Although the fleet industry had been hoping for an announcement in the chancellor’s speech to signal the approach for company car tax going forwards, no announcement has been made. Instead, the Treasury’s Written Ministerial Statement published alongside today’s Spring Statement says a government response is due in the coming months.

It follows weeks of campaigning from the fleet industry, in particular the BVRLA, over concerns that no action would be taken following the recent WLTP review that was announced in the last Autumn Budget.

The consultation, which closed mid-February, looks at the impact that the new emissions testing cycle will have on company car tax and vehicle excise duty (VED) when it is implemented for tax purposes from April 2020.

A new, more accurate testing procedure, 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.

The BVRLA has been vocal – along with the wider fleet industry – on the impact of a lack of action on WLTP, including how it could derail the Government’s own clean air strategy and hike up CO2, including through failing to stem the numbers of company car drivers opting out into privately owned – and very often higher-emitting – vehicles.

Today’s lack of announcement does however allay fears that the Government would take no action at all.

Claire Evans, head of fleet consultancy at Zenith, said: “In today’s ministerial statement, there is a welcome commitment from government to respond to the impact of WLTP on company car tax and VED in the coming months. We back the BVRLA’s position in calling on the Government to demonstrate its support for businesses by adjusting future VED and company car tax bands for 2020 and beyond to account for the increase in WLTP-based CO₂ figures.

“The fleet sector has a key role to play in both buying new ultra-low emission vehicles and then reselling them into the used market. By ensuring that all CO₂-related taxes and charges are treated consistently under WLTP the industry has a platform to build on in securing the road to zero.”

LeasePlan also welcomed the delay of news on the WLTP review.

Matthew Walters, head of consultancy, said: “The new emission testing regime – also known as WLTP – 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.”

However, he slammed the lack of announcement on company car tax rates going forwards, saying: “Philip Hammond would probably say that the Spring Statement is not a time for big announcements. However, there is one big announcement that he should have made today but didn’t: the rates of Company Car Tax for 2021-22 and 2022-23. It’s outrageous that we weren’t told these rates years ago, and yet we’re still waiting. This means that fleets and motorists cannot properly prepare for the years ahead, which is particularly worrying at a time of such economic uncertainty. The Chancellor needs to reveal the rates as soon as possible – preferably even ahead of this summer’s draft Finance Bill.”

The Spring Statement did, however, include an announcement of a consultation into Insurance Premium Tax, which may have implications for associated costs to fleets.

It also announced the arrival in the coming months of a publication setting out the government’s approach to putting the UK at the forefront of mobility, and responding to the significant changes taking place in transport technology – such as the growth in electric vehicles, the development of self-driving vehicles and advances in data and internet connectivity.

The Spring Statement also gave more details of the Transforming Cities Fund, which will bring £60m of investment in 10 cities across England, from the fund announced at Budget 2017. This will fund 30 new schemes such as bus station upgrades, new cycle lanes and road improvements, supporting the wider programmes being delivered by city regions as part of the Industrial Strategy. The 10 cities were selected for the competitive fund in September 2018, and are as follows: Derby and Nottingham £7.2m; Southampton £5.7m; Leicester £7.8m; North East CA £10m; Portsmouth £4m; Norwich £6.1m; Sheffield City Region; £4.2m; Plymouth £7.6m; West Yorkshire CA £2.2m; Stoke-on-Trent £5.6m.

Also of interest to fleets in today’s Spring Statement was an announcement on work to give people the option to travel ‘zero carbon’. This will see the Government launch a call for evidence on Offsetting Transport Emissions to explore consumer understanding of the emissions from their journeys and their options to offset them. This will also look into whether travel providers should be required to offer carbon offsets to their customers.

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.