No Clarity Yet on Car Related Tax
In the 2017 Autumn Budget, the government announced that cars registered from April 2020 would be taxed based on CO2 emissions data as determined under the new Worldwide harmonized Light vehicles Test Procedure (WLTP) regime.
The new testing requirements have been in effect from September 2018, however the old NEDC figures have continued to be used for VED and company car tax purposes until April 2020.
Fleets, company car drivers and the industry have been awaiting clarity on the rates to be used from April 2020. After all, anyone ordering or taking delivery of a new car now will be doing so with limited knowledge of what level of tax they will be paying beyond this year.
Recognising that the WLTP testing results are seeing many vehicles with an increase in emissions levels when compared to the former testing standard, NEDC, the government launched a consultation about whether vehicle tax changes are needed once WLTP results are adopted.
This consultation processed closed mid February. In the last Budget, it states: “The Government will review the impact of WLTP on Vehicle Excise Duty (VED) and company car tax (CCT) to report in the spring.”
Whilst it doesn’t explicitly say, Spring Budget, there was hope that clarity would be provided. Instead we have the promise of a response ‘in the coming months’.
John Lawrence, Managing Director at CLM, comments:
“Uncertainty around BIK rates and the impact of taking a decision on a company vehicle, that could prove to be a more costly step than anticipated, is slowing down our industry.
We need to breathe confidence into the market and a lack of clarity and decisiveness from the government is not healthy for the prospects of the fleet industry, nor helpful for business and company car drivers.
As fleets seek to manage this period of uncertainty, we are seeing a growing appetite for shorter term mobility solutions to keep drivers on the road”