A group of fleet operators led by the British Vehicle Rental and Leasing Association (BVRLA) are calling for clarity on future vehicle taxation plans following the Government announcement in July that the UK will phase out petrol and diesel based vehicles by 2040.
The group, consisting of vehicle manufacturer representatives, data providers and fleet operators, has intensified calls for a detailed Government response after a recent workshop discussing the implications of the upcoming Worldwide Harmonise Light Vehicle Test Procedure (WLTP). The current test regime, the New European Driving Cycle (NEDC), will be phased out in favour of WLTP beginning in September, making changes to the existing system which derives vehicle tax rates from a combination of CO2 emissions and miles per gallon (mpg). It is expected, therefore, that further clarification will be provided in the Autumn Budget announcement.
In the short term, the Government has pledged to keep using NEDC CO2 figures to calculate tax figures, representing 'business as usual' for vehicle quotations from most leasing companies. In the longer term, the WLTP test will provide for a greater range of CO2 values, for different operational cycles, and with greater variation on rates according to optional extras fitted to the vehicle. The BVRLA has voiced concerns over whether this more variable and complicated manufacturer data will be accurately shared between data providers and leasing companies.
John Pryor, chairman of fleet representative body AFCO, said:
'We know WLTP is coming and that it will ultimately replace the NEDC regime. However, as yet we have no clarity from HMRC as to the timescale for when WLTP CO2 figures will be used as the basis for all vehicle taxation, including company car benefit-in-kind (BIK) tax.'
'In addition to a timeline, as always ACFO would want announcements to be made as soon as possible so as much notice as possible is given of WLTP's introduction to enable fleet decision-makers and company car drivers to plan. ACFO also requires clarity over where CO2 data in respect of WLTP should be sourced for P11D purposes, a car's V5 document or somewhere else.'
'Whatever the date of WLTP's introduction for tax purposes, there will clearly be an overlap when fleet decision-makers are operating cars, and company car drivers are at the wheel of them, with taxes linked to either the WLTP or NEDC regimes. That's because vehicle replacement cycles will straddle the date WLTP is officially introduced for tax purposes.'
'ACFO, therefore, assumes that a move to using WLTP-based data will only occur following its official data for use by HMRC as new company cars are introduced. However, that also requires clarification.'
Pryor warned that for fleet decision-makers this will entail an increased layer of administration, with company cars linked to both the incoming WLTP system and outgoing NEDC regime. Company car drivers will also have to be alerted to the change, as BIK tax values may be altered as a result of a car's higher CO2 emissions, even if the new vehicle is very similar to outgoing models.
Pryor added: 'ACFO has already held briefings at regional meetings to alert members to the introduction of WLTP. While they know it is around the corner, and some vehicle manufacturers are already publishing WLTP CO2 and mpg figures for new models alongside NEDC ones, they don't know when the new system will be adopted by HMRC. 'Therefore, there is little fleet decision-makers can do in the way of preparation and planning until they receive notice from HMRC as to when the Government department will adopt WLTP for tax purposes.'