• 01926 353 300

Monthly Archives: October 2017

New Real-World CO2 Emissions Testing Set To Affect Company Car Taxation

New Real-World CO2 Emissions Testing Set To Affect Company Car Taxation

Have you heard about the new emissions testing regulations that will ultimately affect car tax?

No? Can’t say I blame you.

Without much of a fanfare, the launch date for the new testing regulations has been and gone. As of 1st September, the new vehicle type approval emissions tests have switched from the 80’s throwback NEDC (New European Driving Cycle) to the ultra-modern WLTP (Worldwide Harmonised Light Vehicle Test Procedure).

And frankly, it is probably about time.

Although the test remains lab-based, they will better replicate the actual real-world driving conditions and provide a more accurate indication of fuel consumption and emissions.

With more powerful vehicles, the introduction of speed cameras and road furniture, the year on year increases in traffic numbers and the inevitable stop/start motorway routines that this has instilled, the dynamics of driving are now very different to 35 years ago. And until now this has not been accurately reflected in CO2 values.

Enter stage left … the WLTP.

To create more realistic driving conditions the new test will have, among others:

  • higher average & maximum speeds
  • longer test distances
  • more dynamic & representative accelerations and decelerations
  • greater range of driving situations

Although the tests are now more reflective of what happens on our roads, there will, in fact, be an impact on the recorded CO2 emissions. Quite expectedly, the CO2 emissions will be higher than under the NEDC, with some reports suggesting an increase of over 10%. This will have a threefold impact on car fleet management.

Firstly, the movement of official CO2 emissions data for a car fleet will impact the carefully constructed fleet CO2 emission targets.

Secondly, it will impact capital allowance claims as cars will move above the new threshold for claiming the standard rate of 18% which, as of 2018, will be 110 g/km.

Thirdly, it will effectively move the BiK of a car two brackets higher.

Although the EU has suggested the scheme should not be used as a tax grab for national governments, there needs to be an alignment of CO2 thresholds with the introduction of the WLTP. It has been announced that the regulations will not impact directly on car tax until at least April 2019. This is the date for which HMRC have suggested the exiting NEDC figures will continue to be used for taxation purposes. And they have also suggested the review of CO2 thresholds to be used beyond that date will be announced in the Nov 2017 budget.

And of course it is not just the potential increased personal taxation forced upon an employee who may be renewing a like-for-like vehicle but with a new WLTP grading, there is also the potential increased employers NI contributions. Using a Fleetworx client as an example, moving a fleet of 389 cars two BiK brackets will impose an additional £35,000 in employers NI contributions.

So, although the introduction of WLTP is universally welcome, it is basically a watching brief between now and the various staging dates to keep track of looming administrative and cost challenges.

Share this Article

Plug-in hybrids not being plugged in? Real world data supports need for plug-in hybrid fleet strategy.

Plug-in hybrids not being plugged in? Real world data supports need for plug-in hybrid fleet strategy.

We have written recently about the suitability for fleet of EV and plug-in hybrids, and how it is important to develop a deployment strategy considering the following issues:

  • company objectives
  • tax position
  • technology
  • driver behaviour
  • health and safety
  • range
  • image
  • future proofing

One of our main concerns was driver behaviour and how this impacts on real-world fuel consumption.

A plug-in hybrid can only deliver its dual fuel benefits if it is, well, plugged-in.

There are countless stories within the trade of charging cables for plug-ins never having been removed from their plastic wrap and it appears these stories are not just stories, but are being played out in real-life.

TMC have conducted a recent study into the fuel efficiencies of plug-in hybrids and discovered that they are in fact among the highest polluting vehicles in the fleet if not used correctly.

Using the data captured in their Mileage Capture & Audit system, they analysed seven PHEV models, finding the sample vehicles achieved an average of 45mpg, a huge 65% lower than their advertised average consumption of 130mpg.

The subsequent CO2 emissions averaged at 168 g/km, again, in sharp contrast to the advertised CO2 emissions of 55g/km.

And it is the advertised consumption and emissions rates that are leading to claims of “fake hybrids”, allowing such vehicles to sit within the low emission category, attract lower BiK rates and offer conscious-satisfying CO2 savings.

The ”fake” status means that the BiK advantage is of genuine appeal to company car driving employees, whilst the employer is stuck with the challenges of the real-world fuel consumption resulting in higher than expected fuel costs and whole life cost challenges.

Belgium is one European country that has decided to tackle this issue head-on and is removing the friendly tax status of plug-in hybrids. From 2020 the financial benefit will switch to the ratio of the battery capacity to the weight of the car, meaning those cars running on a small battery will become significantly less attractive. UK is also set to follow suit as in 2020 the BiK will be linked to the actual electric-only range.

Plug-in hybrid discipline

In the meantime, as plug-in hybrids remain a popular choice for employees (plug-in hybrids sales for Jan-June 2017 up 14% on same period 2016) it is in the interest of the employer to instill charging disciplines that encourage and increase plug-in usage:

Mileage allowance rates

  • consider utilising sliding mileage allowance rates based on journey length, giving lower mileage rates for shorter journey to encourage the battery to be sufficiently charged

Workplace charging

  • take advantage of voucher scheme offering up to £300 toward the installation of each workplace charging socket
  • place charging point stations in advantageous parking positions to encourage charging
  • reward work place charging by identifying charging vehicles and assigning “charging points”
  • arrange charging etiquette to avoid “charging point congestion”

Homeplace charging

  • support employees in applying for a grant of up to £500 toward the cost of installation of a home charge point
  • encourage the sign-up by explaining the process
  • support the sign up by having clear health and safety guidelines
  • reward the sign-up by offering relevant incentives
  • consider interest-free loans to help with home charge point installation costs
Share this Article