As a result of the emissions scandal of 2015, the motor industry has adopted a new CO2 emissions testing standard, WLTP. These new “realistic” tests mean that emissions are going to increase, on average, 20-25%. This April, the UK will fully adopt WLTP, free from the messy NEDC correlated figures and UK company car taxation is changing alongside it.
WLTP represents a significant change to the vehicle tax system and the government is acknowledging a period of transition will be needed, hence two company car tax tables from 2020 until 2023 and general reductions on the planned, previously published percentages. The government’s response is fully documented in HM Treasury’s Review of WLTP and vehicle taxes: summary of responses but to paraphrase:
the existing VED rates will not be changed… yet. (The government will seek views on moving towards “a more dynamic approach” later this year.)
for vehicles registered from 6 April 2020, most appropriate percentages will be reduced by 2 percentage points for 2020-21, increasing by 1 percentage point in 2021-22 and again in 2022-23.
all zero emission company cars will attract an appropriate percentage of 0% in 2020-21, 1 percentage point in 2021-22, before returning to the planned 2% rate in 2022-23
WLTP emissions have gone up by 20-25% so in order to mitigate rising company car tax as a consequence, vehicles registered after April 2020 will have a 2 percentage point saving. As of April 2020, every emissions measurement will be a true WLTP figure. During the implementation, commencing 2020, there will be a alternative table for vehicles registered before this date. This additional table is the government’s way of trying to mitigate the gap for company car drivers. For the finalised company car tax tables from April 2020 with the new appropriate percentages, download HMRC’s summary of responses and flick to Annex A.
By publishing three years worth of company car taxation tables, fleet operators have clarity on what tax drivers will pay and in addition our industry has more confidence in the government committing to making positive steps towards fully electric cars and we are excited to already be seeing increased interest and uptake. The next challenge is for the UK charging infrastructure to keep up; more on that in our upcoming blog.