Fleet News

‘Stop punishing company car drivers’, BVRLA tells Chancellor

Gerry Keaney, BVRLA

With just over a month to go until the Chancellor of the Exchequer delivers the 2016 Budget, the BVRLA has called on HM Treasury to treat company car drivers more fairly.

In its submission the association has urged the Government to carry out a wholesale review of the current system of company car taxation, recognising the benefits these vehicles bring in terms of reduced emissions and tax revenues.

Nine out of 10 respondents to a Fleet News poll also support a complete overhaul of the company car tax regime.

“Since George Osborne became Chancellor in 2013, company car drivers have been hit by a series of tax increases that are both unfair and unsignposted,” said BVRLA chief executive, Gerry Keaney (pictured).

“It is no coincidence that we have seen 30,000 fewer employees taking a car as part of their work package during this period.”

The BVRLA believes that more and more company drivers are instead choosing to use their own privately-owned vehicles, which on average tend to be older, less safe and more polluting.

“By encouraging employees to give up their company cars, the Government risks hundreds of thousands of motorists opting for older, privately-owned vehicles that are not built to the same safety and emissions standards,” Keaney added.

“In 2015, BVRLA members purchased nearly 50% of all new vehicles sold in the UK, and the average BVRLA member’s leased car emitted just 117.8g/km CO2.”

Going forward, the association calculates that the effect of the 2% increase in company car tax from 2017-18 and the delay in removing the 3% diesel supplement will cost the average company car driver an additional £626.94 in 2017-18, and an extra £882.26 in 2018-19 compared to what they paid in 2013-14.

Keaney added: “The Chancellor must use the Budget to reverse some of the damaging decisions he has made recently, including the delayed abolition of the 3% diesel supplement. These measures are at odds with the government’s stated aims to increase the take-up of ultra-low emission vehicles and improve air quality in the UK.”

The key recommendations in the BVRLA’s Budget submission are:

  • Abolish the 3% diesel supplement on benefit in kind (BIK) tax bands for Euro 6 cars from 2016
  • Reform BIK bandings, offering a greater incentive for users of ultra-low emission vehicles (ULEVs)
  • Make leased vehicles eligible for First Year Capital Allowances
  • Introduce a new tax category for electric vehicles that takes their range into account
  • Provide more in-life incentives for ULEV drivers
  • Safeguard the benefits of company salary sacrifice schemes
  • Provide incentives for the fitment of Autonomous Emergency Braking technology

The 2016 Budget will be delivered on Wednesday, March 16.

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  • bob the engineer - 12/02/2016 21:53

    I have just been looking at the rates and its horrendous, even ultra low emission vehicles, the tax doubles every 2 years yet you can't go any further down the CO2 table! I wouldn't mind if I could opt out but I have no choice, you won't get to many customers with 30kg of gear on the bus! And of course the fleet obsession with self defence from duty of care issues means many of us are denied being able to become cash takers instead, you want the job, you take the lease car. Oh and don't the government know it and are milking it dry. I hope some clever people come up with a way of fighting back. We used to have a clever scheme where the employee leased the car in their name, contributed towards the lease the equivalent of a sensible tax bill, the rest was covered by an excess from the AMAP rates. sensible contributions and no company car tax. Genius. Sadly it was ended, probably due to rapidly rising fuel costs closing the gap on the AMAP rates. Surely someone can come up with some legal equally clever system to thwart the governments captive robbery?

  • Jon Smith - 16/02/2016 17:35

    We have two company cars in our household. A 2009 BMW 120D (134 g/km) which is now looking very expensive next to my Hybrid (99 g/km). We are now about to opt out of the company car option , and then low emissions will not be the main issue . HMRC seem to think we get to change cars every 2/3 years! Both our employers buy them and run them 120000 miles plus ( 5 to 8 years). The tax rates seem to be accelerating and neither of us want to be paying so much tax on such a limited choice of company car. So thats one less company car on the road from March and I will likely follow next year. Who knows where the rates will be in the 2020 s , which is the crystal ball I would need. End result less tax revenue , and two cars most likely with higher emissions than we are giving up , oh and they won t be new.

  • Graham - 17/02/2016 20:02

    When did the Chancellor scrap the plan to remove the 3% diesel supplement in 2016/17? I took my latest company car last year specifically because it would attract a reduced tax level in future years. Clearly not at all well publicised!!

  • Paul Costello - 12/03/2016 19:00

    This tax system has become completely ridiculous. The government takes no account that a company car is in most cases primarily for business use. As a 40% tax payer, my company car tax is very close to what I would pay for the entire cost of the vehicle to the company. Therefore, the so called PERK has eroded to nothing. I also note there will be a 3% rise in all rates for 2019/20; Why and how has this been justified. I, like most company car drivers don't get to change my car every year to the latest ultra-low CO option. The tax rate should be 'locked in' when you buy or lease the car for at least the typical 3 years we keep them. This is the only tax I can think of where the amount you pay goes up as the value of the benefit reduces. Complete madness. Paul

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