17 February 2020
Fleets urged to review company car choice lists as WLTP ‘data gap’ bites
Fleet operators have been urged to review company car choice lists as motor manufacturers are struggling to provide accurate vehicle carbon dioxide (CO2) emission figures just weeks before new benefit-in-kind tax and Vehicle Excise Duty regimes are introduced.
Company car benefit-in-kind tax for all new cars registered from April 6 will be based on CO2 emissions figures calculated under the newly introduced Worldwide harmonised Light vehicles Test procedure (WLTP) - cars registered prior to April 6 will continue to use CO2 figures based on the previous New European Driving Cycle (NEDC) emissions testing protocol.
Additionally, for newly registered cars from April 1, Vehicle Excise Duty rates will also be based on WLTP CO2-achieved emission figures. Cars registered prior to that date will continue to use existing NEDC CO2 values.
Since September 2018 all new cars have had to be tested under WLTP rules - for all new car models requiring a new type approval number from September 2017. However, the British Vehicle Rental and Leasing Association (BVRLA) has warned that a “continued shortage of reliable data” threatened to disrupt the move to new company car benefit-in-kind tax and Vehicle Excise Duty regimes.
The BVRLA, of which Activa Contracts is a member, said “many vehicle manufacturers” were struggling to provide WLTP data for their cars. The Association claimed that member organisations currently only had accurate CO2, electric mileage range or RDE2 compliance (latest NOx emissions standard) information for around 80% of base (pre-option) models.
With average lead times for cars at around nine-12 weeks from ordering, the ‘data gap’, said the BVRLA, was hindering the leasing sector’s ability to provide accurate quotes on many different vehicles and their various configurations and options.
However, simultaneously BMW UK issued a statement saying that it was “ready” for the change to WLTP CO2 data and claimed that any model, including Mini, could be ordered “with the reassurance of knowing how it (WLTP) will impact their tax liability for the next tax year, plus subsequent 2021/2022 and 2022/23 tax years.”
The manufacturer said that all customers could see the data by configuring their vehicle of choice on - https://www.bmw.co.uk/en/index.html.
BVRLA chief executive Gerry Keaney said: “The introduction of WLTP-based motoring taxes is adding yet another layer of complexity and confusion to a fleet sector that is already having to cope with a deluge of new automotive technology and local authority air quality measures.
“The BVRLA and its members are working with motor manufacturers and third-party data providers to bridge this gap, but in the meantime, we would recommend customers consult with their lease providers to assess the impact on their fleet policies and procurement.”
But Rob East, general manager of corporate sales at BMW UK, countered: “Ensuring the easy availability of these details underlines our drive to make it as straightforward as possible for business customers.
“With the benefit-in-kind tax liability a key consideration for many company car drivers when choosing a new vehicle, it’s imperative that we provide our customers with this information. This transparency allows them quickly to make an informed decision as to whether their favoured BMW works for them from a tax point of view. Without WLTP details, they simply have no way of knowing.”
The BVRLA has contacted the Society of Motor Manufacturers and Traders, the motor manufacturers’ own trade body, to offer its support in addressing the WLTP data shortage. It is also working with HM Revenue and Customs on its forthcoming WLTP communications plan.
Since its initial introduction, the CO2 values obtained under WLTP testing have been translated back to correlated NEDC. In some cases the NEDC correlated CO2 values could be up to 17% higher than existing NEDC values for comparable cars and WLTP CO2 values are typically 20-30% higher. The reality of that is company car benefit-in-kind tax and Vehicle Excise Duty is higher in most cases as a result of WLTP testing than under the previous NEDC regime.
To try and account for the impact of the higher CO2 values HM Treasury decreased company car benefit-in-kind tax rates by 2% for 2020/21, and will then increase them by 1% in 2021/22 and 2022/23. However, there has been no adjustment to first-year Vehicle Excise Duty bands or other CO2-linked motoring taxes.
WLTP CO2 data published by BMW UK reveals that company car benefit-in-kind on key corporate petrol and diesel models could be two to eight percentage points higher than the NEDC correlated value for the same model, while plug-in hybrid electric and 100% electric models delivered major tax savings.