Back in 2015, the motoring world was hit with the news that VW diesel cars were only efficient during the testing stage and that in reality the amount of CO2 pollution was much higher. Fast forward a few years and the aim is now to move to electric or zero emission vehicles; but what is to stop the falsifying of emissions tests from happening again?
The government has attempted to control this by switching from one method of emissions testing, NEDC (New European Driving Cycle) to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). Increased accuracy in the data has led to the CO2 emission amounts increasing by 10-20% compared with the out dated method. Details of the rates on benefit in kind % that are applied to the market value of the car can be found here https://www.gov.uk/government/statistics/taxable-benefits-in-kind-and-expenses-payments-company-car-tax-rules-2005-to-2016.
The new testing is being applied to all cars built after September 2017 and therefore the Class 1a NI on the benefit has likely increased. The government however, has not done this for the purpose of generating more tax revenue and is likely to decrease the tax rates on this once enough data has been gathered. The proposed adjustment to the tax rates is not expected to come into effect until April 2020, so for the next year, if your company is planning in investing in new vehicles it will be important to make sure that you consider the correct emissions rating and the potential tax liability that you could face.
Blog written by Matthew Keetley
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