Fleet News

Car industry groups attack tax hike plan

TWO major motor industry bodies have joined the chorus of disapproval over plans to increase new vehicle registration tax by up to 52% in a move which could send fleet costs rocketing by up to £18 million a year.

The Driver and Vehicle Licensing Agency (DVLA) has suggested pooling the First Registration Fee (FRF) with the cost of driver licensing, which would increase the amount motorists pay to register a new vehicle.

The current price is £25, but following the proposed changes it could rise to as much as £38, according to the Retail Motor Industry Federation (RMI).

RMI chief executive Matthew Carrington said: 'Fleet operators and business car users account for about 48% of new vehicle registrations. The fee rise would increase their costs as a whole by about £18m per year. A fleet operator who registers 400 new vehicles a year would face additional initial registration costs of just over £5,000.'

The Society of Motor Manufacturers and Traders (SMMT) believes the proposed increase in fees is to cover the millions of vehicles that remain unlicensed every year.

Christopher Macgowan, chief executive at the SMMT, said: 'There is simply no justification to increase this fee by up to 52% for buyers of new cars and commercial vehicles.

'The truth is that due to fraud and evasion some 1.75 million cars fail to pay their duty each year and it appears this is a back-door way of recovering the money. In addition to the added cost to consumers, there will also be an extra burden on manufacturers and dealers who will have to change advertising and marketing materials to reflect this surprise new tax.'

The proposals have also been criticised by the British Vehicle Rental and Leasing Association as an extra burden on the fleet industry (Fleet NewsNet July 22).

BVRLA director-general John Lewis said: 'This is another tax increase on the fleet industry and on consumers from a Government that, despite raising more in taxes than any previous government, can never get enough.'

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee