The BVRLA certainly thought so ahead of the Spring Budget, their members having told them that “the current company car tax regime is making these vehicles less attractive to employees” in reference to plug-in hybrid and electric cars.

SMMT statistics reveal that all-electric car sales in 2018 thus far are a whopping third lower than last year, while the BVRLA’s own leasing survey identifies that Q4 2017 saw the UK’s average new car CO2 rise to the highest level since Q2 2015 at 112.7g/km.

It’s not all bad news, admittedly, with plug-in hybrid cars and vans accounting for a healthy 6% of new vehicle registrations, but while the anti-diesel campaigns may have helped reduce NOx and particulate matter levels, CO2 clearly still remains a problem that diesel addresses more effectively than petrol.

The BVRLA identified various ways in which the government’s company car policies have likely contributed to the national rise in CO2 emissions, including:

  • the drop to 2% in company car tax for zero-emissions electric vehicles not being set for introduction until 2010/21, before which taxation will actually reach a 16% high, understandably resulting in potential adopters delaying taking the PHEV/EV plunge
  • wider company car tax rates beyond the 2020 tax year not having been clarified, leading to what the BVRLA reckons is many employees ditching company cars and either buying or leasing cars personally rather than wade into uncertainty over their employment tax situations.

The latter reasoning is backed by figures showing that personal contract hire (PCH) grew 20% in the last quarter of 2017 but business vehicle leasing shrank slightly by 2%.

UK businesses and other organisations have been doing the right thing in imposing CO2 ceilings and hence incentivising their user-chooser staff to opt for less-polluting cars through their salary sacrifice and other schemes, so tweaks in taxation legislation certainly seem to be necessary to fix the overall situation.

With many fleets operating 4-year car leasing cycles, the treasury’s traditional 5-year published tax rates used to prove most welcome to fleet managers, finance directors and the like, so it was disappointing that the Chancellor Philip Hammond’s Spring Statement 2018 failed to confirm rates for beyond 2020/21.

In November 2017’s Budget it was announced that benefit-in-kind (BIK) tax and vehicle excise duty (VED) or ‘road tax’ from April 2020 will be based on CO2 figures produced using the new and more realistic WLTP tests. This will unarguably result in real-world CO2 emissions figures rising, leaving many fleet heads assuming that tax will also increase as a result. Clarification from the Spring Statement would have been welcomed, but many stakeholders are accepting of the fact that the government is currently concluding a consultation into WLTP, after which more concrete advice will surely follow.

Is all the anti-diesel messaging coming from the government and other automotive plus environmental bodies also to blame for the perhaps surprising resurgence in UK CO2 levels for the first time in 19 years? “About half last year’s overall CO2 rise was attributable to this decline in diesel demand”, admitted the SMMT, and the ironic upward trend is likely to see the UK failing to meet the EU’s tougher emissions standards for 2021, by which time the goal is a limit of 95g/km CO2 for new cars.

We agree with the SMMT’s chief, Mike Hawes, who commented that “greater investment in charging infrastructure will be critical” in encouraging fleets and private drivers to more quickly make the switch to plug-in hybrid and particularly all-electric vehicles

Here at Vehicle Consulting in Stockport, Cheshire, we specialise in assisting the spectrum of car leasing customers from fleet managers to company car opt-out staff who prefer to lease through PCH – and we’ll be sure to provide another company car tax update on our blog when the landscape becomes clearer.