Watch out! Changes to UK tax and vehicle legislation
New rules on road tax were introduced in April 2017 so this month marks the first year many UK motorists will be charged the new flat rates.
Owners registering vehicles on or after 1st April 2017 paid a set tax rate in the first year based on CO2 emissions. Cars with zero emissions paid £0, 1-50g/CO2/km £10, those with emissions of 51-70, £25 and so on up the scale. However, cars at the top end (over 255g//CO2/km) were charged a whopping £2,070.
Rates for the second tax payment onwards (what they will pay for now basically) are £140 a year for petrol or diesel vehicles, £130 a year for alternative fuelled vehicles (hybrids, bioethanol and LPG) and nothing for vehicles with zero CO2 emissions, such as the Jaguar iPace EV400, Ford Focus EV or the Peugeot iOn.
The new tax rules were mostly to clamp down on diesel emissions, which a year ago were thought the primary culprit of increased levels of city pollution in the UK. Debate has raged since then with the automotive and related industries (such as transport) firing pro-diesel comments, opinions and material in defence of the barrage of information (much of it unverified) from environmental and public health groups.
As of 1st April 2018, diesel cars were pushed up a band if they fail to meet the latest Euro 6 emission standards but the change only apply to cars, not commercial vehicles.
Meanwhile, the debate rages on.
Fleets fear new emission values and the impact on company car costs
In 2016, the UK government published BIK (benefit-in-kind) tax rates for 2020-21, which gave fleet decision-makers sight of future tax liabilities for the next four years.
However, the Treasury has yet to make a clear decision as to how company car tax and road tax will take account of the new emissions testing regime.
Despite having been two budgets and last month’s spring statement since then, the Treasury has yet to outline its plans beyond 2021. Fleet owners have no clear indication as to what National Insurance Contributions (NICs) will be or the level of company car tax their drivers will face beyond 2020.
The Government has previously announced that the new drive-cycle – the Worldwide harmonised Light vehicle Test Procedure (WLTP) – will replace the former New European Drive Cycle (NEDC) for tax purposes from April 2020.
However, figures suggest the conversion tool is increasing CO2 values by 10% on average or between 10-15g/km, leaving fleet decision-makers and company car drivers facing a potential tax increase.
Pressure groups and the automotive industry have been calling for changes to UK MOT legislation to get up-to-date and aligned with new vehicle technology, much of which is computerised (such as safety and driver assistance systems – ADAS). Such technologies are not currently dealt with thoroughly enough under the existing scheme.
New MOT rules, which will come into force on Sunday 20th May 2018, aim to reduce the number of dangerous cars on the roads but they don’t go far enough some argue. They don’t directly address safety systems, plus for the first time ever, cars over 40 years of age (first registered in 1978) will no longer need an MOT certificate.
The most significant change UK fleet managers must be aware of is the potential liability for a £2,500 fine, if a vehicle is driven having failed its MOT – even if its existing certificate has not yet expired.
The new rules change the way vehicles are classed after a test. Any car that fails an MOT is deemed “dangerous” and driving such a vehicle could attract the £2,500 fine and three points on the driver’s license. Using a vehicle in a dangerous condition has been outlawed in the UK for some time but the new rules are designed to bring clarity and uniformity to what is and isn’t safe to drive. Historically, the tester could make that call themselves in many cases.