ACFO URGE THE GOVERNMENT TO PROTECT THE COMPANY CAR WITH ACTION PLAN
Posted on 29th May 2019 at 15:13
The Association of Car Fleet Operators (ACFO) is urging the Government to adopt an action plan to protect and enhance company car demand.
The fleet decision makers’ organisation has submitted the plan to HM Treasury as part of its review into the impact of the WLTP (worldwide harmonised light vehicles test procedure) on company car benefit-in-kind (BIK) tax and vehicle excise duty.
The introduction of WLTP has generally increased the official CO2 emissions of many cars by as much as 20% but the BIK tax bands have not changed to reflect this, meaning that drivers are paying significantly more tax for using the same vehicle.
ACFO says businesses are closing company car schemes with employees opting for cash due to year on year rises in BIK tax and uncertainty over future taxation levels.
Phillip Hammond is expected to indicate the direction of travel on any changes to the existing BIK and VED regimes in the Government’s Spring Statement on Wednesday 13th March. It’s likely to be followed by a consultation on the technical legislation with any changes due to be introduced in April next year.
ACFO has urged the Government to:
Realign BIK tax bands to smooth the transition to WLTP or consider a ‘grandfathering’ of cars registered prior to 2020 to account for the rise in CO2 emissions under WLTP testing.
Implement the 2% BIK tax rate for cars with CO2 emission of 0-50g/km immediately and not wait until 2020/21 as scheduled.
Provide a continuous four year view of company car BIK tax thresholds to give employers and drivers certainty over future bills.
Remove the existing 4% BIK tax supplement on diesel cars that do not meet the Real Driving Emissions Step 2 standard.
Confirm an extension of the existing plug-in car grant scheme for at least two years to provide fleets with a period of stability and certainty.
Consider further incentives, such as congestion charge exemption and free parking in urban areas (in addition to BIK tax) to encourage the increased adoption of ultra-low emission vehicles.
In its submission to the Government, ACFO highlighted HM Revenue and Customs’ data showing that while the volume of company cars on the road was reducing, the tax take from drivers and companies paying Class 1A National Insurance on the benefit was increasing.
Furthermore, the Office for Budget Responsibility has already factored in an additional £500 million flooding into HM Treasury coffers as a result of the impact of WLTP on taxation by 2024.
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