Where next for fleets after the Budget?

Posted By: TMC - 5th November 2018

By Paul Hollick

 

You don’t often hear an entire industry say “Whaaaat?!” but that is pretty much what happened after the Budget on October 29.

Fleets are justifiably angry and frustrated at being kept waiting for clarity on future company car tax (CCT) rates.

The Government will say the delay is all for the long term best. WLTP has turned into a worldwide lesson on the law of unintended consequences, so it’s right to review its impact on CCT before doing anything else.

However, the timetable for the CCT review anticipates a report (not necessarily a decision) in the spring. That puts it squarely in the path of any bureaucratic upheavals around Brexit, when CCT issues will be like the proverbial snowflake in the avalanche landing on civil servants’ plates.

Moreover, Budget day rounded out a month of disappointments for drivers and fleets looking for some signs of consistency from the government.

First we had the sudden announcement that the plug-in car grant will be cut by 22% after 9 November, with most PHEV buyers losing the subsidy completely.

Then, while fleets and businesses were still digesting this news, MPs on the Commons Business Select Committee urged that the end of new ICE car sales be brought forward to 2032.

If so, UK Plc will be looking for fleets to step up to the plate, since they account for more than half of new car registrations. But between WLTP and the government’s dithering over CCT, many company car drivers could conclude that now is a good time to opt out.

As I have already noted here on this blog, the BIK tax-gradient between EVs and ICEs will soon become a virtual cliff: negligible for plug-in drivers but heavy on even relatively frugal ICEs.

At this rate, the range of choices for  business drivers who want to stay in their companies’ schemes will be between a lightly BIK-taxed EV, or an ICE on an Employee Car Ownership scheme (i.e. with no BIK liability). Failing either of those options, they will be looking at an ICE that has a relatively high BIK bill attached to it.

While we wait out this winter, the most promising strategy is still to measure the real-world performance of vehicles and drivers, aiming to go as low as practically possible on CO2 and fuel consumption.