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WLTP failure will hike up CO2, warns fleet industry

Government attempts to decarbonise road transport will be derailed if the Treasury fails to take action to mitigate the effects of the switch to WLTP.

The latest consultation calls for input on new measures to cut NO2 levels as soon as possible in 'third-wave' towns and cities

Fleet experts including the BVRLA are warning that failure to address the impact of WLTP on car taxation could see more drivers opt out

That’s the view of a number of fleet experts as they urge the Government to treat fleets fairly in its WLTP review to help stem the rising numbers of company car drivers opting out into more polluting cars.

With just two days left until the Treasury closes its review into whether revisions to Company Car Tax and Vehicle Excise Duty are required as a result of the shift to WLTP, concerns are beginning to mount that the Government may take little or no action at all to remedy the effects of the higher CO2 figures from the new WLTP testing cycle, which will be used to work out CCT and VED from April 2020.

Speaking to Fleet World, a raft of fleet specialists have already highlighted how the Government needs to use the review to take action to mitigate the tax impact of WLTP for fleets to ensure that it doesn’t jeopardise its own plans to drive air quality.

Initial evidence provided by manufacturers suggests that more than 50% of cars will see an increase from NEDC to WLTP of between 10% and 20%, bringing major cost increases for drivers through BiK and for fleets through VED and National Insurance contributions (NICs).

Combined with a lack of information for BIK rates after 2021, this is said to be leading fleets to hold onto vehicles for longer due to lack of clarity on how new cars will be taxed in the future, or actually pushing drivers to opt out and take cash allowances, potentially for much higher-emitting vehicles. Ogilvie Fleet has said this week that it’s seeing “huge demand” for PCH, backed up by latest quarterly leasing figures from the BVRLA, which show that in Q3 2018, business car leasing fell 7.2% while personal contracts continued to rise with a 19% increase, furthering a trend seen since 2016.

Yet, analysis by ALD Automotive has found that vehicles registered as company cars within the ALD corporate business have on average 16g/km lower CO2 than private individuals who are not in a company car scheme.

It’s this concern over higher CO2 that’s led the BVRLA to reiterate its call to the Government to treat fleets fairly or risk derailing the ‘Road to Zero Strategy’ as it warns that government failure to manage the impact of WLTP-based company car tax will only see more drivers opt out.

Chief executive Gerry Keaney said: “We need HM Treasury to acknowledge and support the fleet sector’s role by providing a fair, consistent 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.”

The Vehicle Remarketing Association has said it shares the BVRLA’s concern about how the potential, negative impact on the company car sector could have widespread repercussions.

Sam Watkins, chair at the VRA, explained: “The Government’s stated intention to do nothing to the bands equates to a relatively substantial increase in company car taxation.

“This is problematic in several respects and, we believe, shows a potential lack of understanding about the company car’s role in both the UK motor industry and wider business community.

“Fundamentally, the company car provides UK business with a method of flexible, cost-effective business transport that is really inaccessible through any other route.

“Making company cars unattractive to employees from a taxation point of view doesn’t mean that those same journeys won’t be made – they will, but in cars provided by employers that will be older, more polluting and potentially also less safe.

“The way in which the company car market provides a continual turnover of relatively new stock through the remarketing sector is perhaps the single most important reason why the UK has among the least polluting vehicle parcs in the world.”

The BVRLA is urging the Government to act in four main areas over the WLTP consultation:

  • Adjust future VED and company car tax bands for 2020 and beyond to account for the increase in WLTP-based CO₂ figures
  • Provide a legacy CCT table for pre-April 2020 vehicles, freezing the rates at 2018/19 level
  • Provide a 4/5-year view of future company car tax and VED bands, enabling fleets and drivers to plan their vehicle choices
  • Ensure that all CO2-related taxes and charges (e.g. congestion zones, lease rental restriction) are treated consistently under WLTP

It’s also urging fleets to submit their responses to the review, ahead of the deadline this Sunday 17 February.

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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. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.