WLTP ‘limbo’ prompting fleets to extend contracts
Uncertainty over how the new WLTP fuel consumption and emissions test will impact company car taxation is leading some large fleets to extend leasing contracts, according to Arval.
Although fleets normally have access to Benefit in Kind tables 3-4 years in advance, the Government has only made tax information available up until the 2020-21 tax year as it looks to switch to new formats of VED and Company Car Tax from this date. This means that many fleets and fleet drivers acquiring cars now do not know how much tax they will have to pay over the life of the vehicle.
But Arval said some fleets are ‘sidestepping’ the situation by extending lease contracts on a month-by-month basis, enabling them to wait till there is an announcement from the Government. This follows last week’s comments from Meridian Vehicle Solutions that fleets are also using medium-term rental as a means to manage current uncertainty over WLTP and company car taxation.
Shaun Sadlier, Arval’s head of consultancy, added that the information on the new CCT regime, when it does arrive, will inevitably create a sudden burst of demand for new car leases – bringing issues with it.
“It seems very likely that we are building up a logjam of demand and that, following a Government announcement on WLTP and taxation, we will see a peak in car sales as everyone rushes in to place orders,” he added.
“This, in itself, may create knock-on problems because we don’t yet know what types of cars and specific models WLTP will make attractive from a tax point of view, and they may very well be in short supply in the medium term.”