Fleet News

Diesel drivers head for new car tax trap

FLEET decision-makers could be leading drivers into a long-term tax trap as the industry gears up for its biggest sales month of the year with the launch of the 53 numberplate.

Hundreds of thousands of fleet drivers will receive a new company car next month, with more than a third opting for diesel.

But industry experts fear few fleets have explained to drivers that carbon dioxide-based company car tax for diesels operates on a two-tier system. There is a 3% tax band increase for all diesels, unless they meet stringent Euro IV emissions standards, so even the cleanest non-Euro IV diesel is taxed at 18% (3% above the minimum 15% threshold).

But a growing band of manufacturers already produce Euro IV-compliant models alongside their 'standard' diesels.

The situation is made worse because many drivers will be keeping their cars for three years, beyond the January 2005 deadline for all diesels to meet Euro IV standards. Industry experts are working to raise awareness among both fleets and drivers, but it could well prove too late for many drivers who have ordered vehicles.

Brian Farrell, pricing risk manager for Lex Vehicle Leasing, said: 'The industry is at a transition point, where Euro IV diesel vehicles will take more of the market. Some fleet decision-makers are very switched on to this issue, but I don't think the implications have been made clear throughout the industry.'

Lance Hicks, head of customer relations at Arval PHH, said: 'If a company has a solus arrangement with a manufacturer, then it will be interesting to see how that impacts on the choice list they are offering drivers.

'It is very much down to customers to ensure drivers understand the issues, but we are helping with an online tax calculator that is being updated to include Euro IV models.'

The issue highlights the need for fleet decision-makers to ensure they are fully trained to tackle the issues they face in their jobs, according to Stewart Whyte, director of the Association of Car Fleet Operators.

He said: 'It is clear that there is far too little information about to identify clearly which vehicles do qualify. For drivers, it is clearly just as important to know the benefit-in-kind liabilities on a car as it is to ensure that the upholstery is the right colour.

'Everybody has a duty to inform on this topic, but manufacturers are strangely quiet.'

Key issues related to fuel choice will be addressed at the Fleet News Hit for Six conference, which takes place on October 1, in Oxford (Click on the link on the righthand side of the homepage for more information).

Currently there are about 11 models that meet Euro IV standard, covering every sector of the fleet market. Vauxhall revealed this week that some customers are spotting the tax benefits of a Euro IV compliant engine, provided in its Astra 1.7 CDTi.

In June, its sales were equivalent to 30% of non-Euro IV 1.7 DTi sales, but this grew to 50% by July. Fleet News lists Euro IV diesel models in its monthly running costs tables, published on the penultimate week of every month.

  • Register with the Fleet News Get Trained campaign via the link on the FNN homepage
  • What do you think? Email fleetnews@emap.com

    Euro IV compliant diesels currently available

  • Audi A3 2.0 TDI
  • Audi A4 2.5 TDI (163ps)
  • Audi A6 2.5 TDI (163ps)
  • Fiat Punto 1.3 Multijet
  • Toyota Corolla 2.0 D-4D (116ps)
  • Toyota Avensis 2.0 D-4D
  • Vauxhall Astra 1.7 CDTi/1.7 CDTi ECO4
  • Volkswagen Touran 1.9 TDI
  • Volkswagen Touran 2.0 TDI
  • Volkswagen Passat 2.5 TDI
  • 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