Company Car Today

The fleet  industry  has – largely – reacted positively to the Treasury releasing BIK rates beyond the 2020/21 tax year earlier this week. Here is a round-up of comments:

 Ashley Barnett, head of fleet consultancy at Lex Autolease:

“The lack of clarity on the long-term tax regime for company cars has severely hampered uptake, clearly reflected in the most recent car registration figures from the SMMT and the reduction in the number of people paying company car taxation.

The announcement gives a degree of much-needed certainty to company car drivers and fleet managers. Coupled with the EV infrastructure announcement, it is a welcome sign of the Government’s commitment to stimulating company car uptake and getting newer, cleaner vehicles on the roads, a vital part of its Road to Zero strategy.

“It is really good to see that Benefit in Kind (BIK) will be 0% on EVs from April 2021 with this increasing by 1% to reach 2% in 2022-23 regardless of registration date.

“The freeze on BIK for vehicles under NEDCc at 2020-21 levels for two years is also welcome news for the fleet industry. This, coupled with RDE2-compliant diesel vehicles being exempt from the 4% diesel supplement, gives clear foresight for company car fleet decision makers.”

 BVRLA director of policy and membership, Jay Parmar:

“The Government has responded positively to the Company Car Tax campaign mounted earlier this year by the BVRLA, its members and fleet industry colleagues. Our regular engagement with policymakers is clearly paying off as there now appears to be a greater appreciation for the importance of our industry in delivering government’s wider economic and environmental ambitions.

Salary Sacrifice

“Recognising the value of the company car market in supporting the transition to zero emission technology is also a positive endorsement for our sector, showing refreshing alignment between government’s environmental and fiscal policies.”

“The Treasury is giving back some of the unfair Company Car Tax windfall it was set to receive as a result of WLTP and providing some essential extra visibility on future tax costs for those looking to order their next vehicle. This is a good day for company car drivers and our members.”

Simon Carr, chief commercial officer at Alphabet:

“The Government response is a welcome reduction in the tax burden for most company car drivers. It recognises the important role that businesses and employees play in the transition to ultra-low and zero emission vehicles. From a fleet perspective, it adds a layer of complexity which decision makers will need to understand the operational impacts of prior to communicating with their employee community.

“On an optimistic note, the announcement of 0% BIK tax rates for pure battery electric vehicles from April 2020 – followed by 1% in April 2021 and 2% in April 2022 – could see a renaissance for the company car and give us real momentum on the road to zero. Let’s also remember that Plug-In Hybrids are still a vital tool for the transition towards mass electrification for many organisations and although they will benefit from this 2% BIK reduction, we hope to see further practical and financial support for these vehicles in the Autumn Budget.

Paul Hollick, ICFM chairman:

“ICFM is relieved that the Government has taken at least some action to limit company car drivers’ exposure to higher benefit-in-kind tax bills as a result of increased carbon dioxide emissions figures under WLTP testing when compared to NEDC testing.

“We had feared that the status quo would remain and thus the impact of higher CO2 emissions averaging 20-25% under WLTP would be ignored. So, this is welcome news although we were should really expect more.

“While the Government has slightly incentivised the take-up of zero emission models it has failed to take account of the lack of availability of those vehicles in today’s marketplace.

“For fleets and company car drivers to truly embrace the plug-in vehicle revolution, the Government needed to take account in reviewing tax rates of model launches and availability. Plug-in vehicles – and particularly zero emission models – remain a very niche product and what availability there is does not meet fleet and company car driver requirements in the majority of cases.

ACFO director Caroline Sandall:

“The freezing of company car benefit-in-kind tax rates from 2020/21 for the vast majority of employees that already have a company car – or will be taking delivery of a new one prior to April 6, 2020 – is a token gesture. The rise from 2019/20 rates has not been cancelled.

“For employees taking a delivery of a company car from April 6, 2020 the two percentage point reduction in rates in 2020/21 and the one percentage point reduction in rates in 2021/22 before they equalise out in 2022/23 is unlikely to compensate for higher CO2 emissions as a result of WLTP testing.

“Indeed what might occur is that fleets and company car drivers may defer vehicle replacement for the remainder of 2019/20 and wait for the new lower tax rates to be introduced on April 6, 2020.

“The Government has acknowledged that evidence provided to it by the industry during the company car benefit-in-kind tax review showed that CO2 emission figures under WLTP testing were on average 20-25% higher than under the previous NEDC regime and in some cases up to 40% higher.

“It is ACFO’s belief that the reduction in rates for two years is unlikely to compensate drivers fully for the increase in emissions, although it will soften the blow.

“ACFO is pleased that all 100% electric vehicles will be taxed at 0% for 2020/21 before rising by one percentage point in each of the following two financial years. However, again it is a token gesture.

“The number of zero emission cars currently available is miniscule and lead times are lengthy so the real value of the 0% rating will be extremely limited. Most major motor manufacturers have announced plans to introduce numerous plug-in models over the next 18 months and the Government needed to take account of model launches and availability in reforming company car benefit-in-kind tax.

“Consequently, for many drivers plug-in vehicles are not suitable and the arrival of WLTP emission figures means that on ‘normal’ petrol and diesel cars the tax burden, will in most cases, rise. The impact of the change in emission testing on some models is a rise of perhaps 25-30g/km on some models, which pushes those cars into tax bands several notches up than currently.”