Review Launched on Company Car Tax and VED

A review into the impact of WLTP on company car benefit-in-kind tax and Vehicle Excise Duty (VED) has been launched by the government.

HM Treasury says that to ensure the government “strikes the balance between protecting consumers and meeting our climate change commitments”, the review will consider whether vehicle tax changes are required once WLTP-based CO2 emission figures are adopted as the basis of motoring taxation from April 2020.

The fleet industry is being asked to respond to a series of questions which can be found here by February 17, 2019.

The review, which was revealed in the October 2018 Budget, makes clear that cars registered before April 2020 will maintain their current tax treatme nt. Other policies linked to CO2 emissions – such as capital allowances – are not being considered in the review.

The review will not consider the implications of using the EU’s computer simulation tool, known as CO2MPAS, used to convert WLTP figures back to an equivalent NEDC figure as is happening during the current transitional period to April 2020.

Any changes to company car benefit-in-kind tax and Vehicle Excise Duty are likely to relate to their CO2 banding thresholds as the consultation document says: “The government believes that the fundamental structure of Vehicle Excise Duty and company car tax is appropriate, including the diesel supplement and timeframe for introduction of future company car tax rates.”

The document continues: “If changes to the vehicle tax system are required, these would be introduced into Finance Bill 2019-20, with draft legislation being published for technical consultation ahead of that. This puts a premium on keeping any changes within the current framework.”