Choose a Company Car Now to Avoid WLTP Tax Increases

The new Worldwide Harmonised Light Vehicles Test Procedure (WLTP) is having a huge impact on vehicle emissions and MPG data, and is already affecting taxes.

The long-standing NEDC vehicle testing system is slowly being replaced with the new WLTP procedure, which began in 2017 on new types of models. As of September 2018, all new cars and vans will have to be tested under WLTP, with new cars having to be retested before then, which is likely to result in higher CO2 emissions and lower MPG.

Figures for cars that have had NEDC-correlated WLTP tests show an average increase of 10% or 10-15g/km for CO2 emissions. From a fleet perspective, CO2 emissions on certain company car data is already rising and these increases will impact on taxation.

It may be advisable to choose a company car now that is still tested under NEDC to avoid both tax increases and confusion. The confusion comes from vehicles that will have numerous CO2 figures during the transition period where WLTP comes into play. Some cars will have a figure based on WLTP testing, and a NEDC-correlated figure. These have been calculated by a tool called CO2MPAS, which converts a WLTP figure back into a comparable NEDC figure. The cars which have either or both of these new CO2 values are likely to have higher figures.

Some manufacturers have managed to time model updates and changes to ready themselves for September’s deadlines, whereas others have taken models off their ordering guides (such as BMW 330e) or delayed production altogether, such as VW Group.

One of the UK’s most popular cars, the Ford Focus, has just been relaunched and put on sale ready for September. Ford, and other manufacturers who are able to tie in model changes with the September deadline, have managed to take advantage of clever technologies, weight reduction, and aerodynamic styling to become more fuel efficient. Ford claim that the new Focus model has ‘fuel efficiency and CO2 emission improvements of 10% across the range’. However, other manufacturers have been forced to keep existing models that have WLTP and NEDC-correlated figures, which heavily impact on CO2 emissions and MPG.

New taxation will come into play in April 2020 but as of yet it is unclear what impacts this will have. This lack of clarity may be part of why we are already seeing tax increases through fear of what will happen in the coming years.

When it comes to fleet decisions, clever forethought may be required. Those who are due to choose a new company car following the changes may be encouraged to take a Salary Sacrifice alternative, due to uncertainty surrounding Benefit in Kind taxes. Those who are due to change their company car before September 2018 would be best to choose a company car that is available now and has been tested under NEDC.

If you're looking to choose your next company car now, contact us to find out about our comprehensive range.

 


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