Features
22 Jan 19

TMC calls on UK government to remove diesel company car tax penalty

A leading fuel management company has urged UK fleets to lobby the British government to remove the four per cent surcharge applied to diesel cars under UK company car tax rules.

The government is currently consulting on potential changes to the way benefit in kind tax is calculated in order to introduce WLTP emissions figures. Carbon dioxide emissions are expected to be at least 10 percent higher under WLTP testing than under the current NEDC system.

Company car tax surcharge

At present, company car tax is calculated as a percentage of a car’s official list price, determined by its emissions of carbon dioxide. However, diesel cars incur an additional four percentage point surcharge because of the pollutants in their exhaust gases. The only exception is for diesel cars that meet Real Driving Emissions 2 (RDE2) standard, although currently none actually do (Mercedes-Benz will become one of the very first to launch these cleanest diesels with its new A-Class A200d and A220d(pictured above) due in the spring).

In real terms the four percentage point surcharge for diesels adds between 10 percent and 20 percent to most company car tax bills.

Simplify WLTP introduction

Paul Hollick, managing director of TMC, said that removing the surcharge would make it simpler for the government to introduce WLTP emissions figures in place of NEDC figures, and give a boost to the UK’s struggling new car market.

“Today’s new fleet diesel cars emit 55 times fewer particulates and nearly seven times less NOx than those being operated when the diesel surcharge was first brought in,” he said.

“The reality is that the surcharge was there to incentivise cleaner diesels and it has already gone a long way to achieving that goal. There seems no justification for holding on to it until Real Driving Emissions-certified models begin to trickle on to the market in future, especially when the government’s own guidelines for clean air zones exempt all current Euro 6 cars from toxicity charges.”

Fleets rely on diesel

TMC has made this case in its submission to the Government consultation on company car tax. Analysis of a 20,000-strong sample from TMC’s 120,000 fuel card users reveals that 97 percent of the cars are diesel, and that their fuel costs are 10 to 20 percent below petrol models, depending on pump prices.

The UK government’s review of WLTP and vehicle taxes closes on 17 February 2019.

 

Authored by: Jonathan Manning