Fair company car tax can drive up-take of greener vehicles, says BVRLA

Working with the fleet sector to develop a fair and well-signposted Company Car Tax regime can encourage drivers to choose greener, cleaner vehicles, the BVRLA has said.

In a letter to the Chancellor ahead of the Spring Statement, the BVRLA – whose members are responsible for one-in-eight cars on UK roads – said the government can help reverse the rise in new car CO2 emissions and the fall in EV sales, by making some adjustments to the company car tax regime.

“Our members are keen to accelerate the uptake of newer and more efficient vehicles and are already responsible for the majority of plug-in registrations,” said BVRLA Chief Executive, Gerry Keaney.

“They tell us that the current Company Car Tax regime is making these vehicles less attractive to employees.”

In a letter to the Chancellor ahead of the Spring Statement, the BVRLA has urged him to accelerate the introduction of its 2% Company Car Tax band for zero-emission vehicles. This tax band is currently scheduled to increase over the next two years to a high of 16% in 2019/20, before dropping to 2% the year after. There are signs that the current tax rate is putting the brakes on new EV registrations from company car drivers, who are postponing the jump to electric until the tax regime offers an incentive.

BVRLA members would also like to see further clarity on Company Car Tax rates beyond the 2020 tax year. The association believes that many people are abandoning their company car and making their own arrangements due to uncertainty over what their tax bill will be in the future.

Company cars have some of the lowest carbon emissions on UK roads, largely because many firms set a maximum CO2 limit and Company Car Tax payers are incentivised to choose low or zero emission models.

The BVRLA believes that recent changes to the Company Car Tax regime have reduced the impact of these incentives and encouraged many employees to leave their company car scheme and either lease their own vehicle or use an existing household one. The latest BVRLA figures for Q4 2017 show that the business lease fleet shrank by 2% year-on-year, while the personal lease market grew by 20% in the same period, evidencing the trend of people moving away from company cars.

BVRLA member data shows that this can have a huge impact on CO2 emissions, with the average new personal lease car emitting 125g/km of CO2, 14% more than its new company car equivalent, which has average emissions of just 110g/km.

“With frequent and well managed fleet replacement cycles, BVRLA members are responsible for nearly 50% of new car registrations,” added Keaney.

“We want to work as a constructive partner with government, delivering a rapid shift to zero-emission motoring, while recognising the need to sustain tax revenues.”