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Change in VED rates 'could cost rental industry more than £30m a year'

Date: 23 November 2016   |   Author: Daniel Puddicombe

The British Vehicle Rental and Leasing Association has claimed the rental industry could be hit with a tax rise of more than £30m a year if the Government is to continue with plans to change VED rates from next April, and is urging ministers to defer the new rules.

In last year's summer Budget, previous chancellor George Osborne announced plans for a new tax system from April 2017 that would link to CO2 emissions for the first year, and then calculate tax based on the vehicle's list price in subsequent years.

From the second year onwards, petrol, diesel and hybrid cars that cost less than £40,000 will incur a flat rate of £140 regardless of vehicle emissions, which could discourage buyers from choosing the greenest vehicles.

To mitigate the tax hike, which is estimated at £31.4m a year, the BVRLA said its members are planning on operating cars for longer before disposing of them, which could result in 29,000 fewer new car registrations by car rental companies next year.

At present, cars on BVRLA member fleets are disposed of after 13 months on average, though a spokesman said the length of time a firm would hang on to cars for beyond the present-day figure would vary from fleet to fleet.

Gerry Keaney, BVRLA's chief executive has called on the Government to defer the implementation of the new first-year VED rates, with the rental body boss adding the changes could hamper the uptake of low-emission vehicles in the process.