Call for end to diesel BIK surcharge
22 January 2019
Author: Sean Keywood
The 4% company car tax surcharge for diesel vehicles should be scrapped next year, according to fuel management company TMC.
The firm has responded to a government consultation on how VED and BIK rates should be adjusted in response to the introduction of the WLTP regime, set to bring rises in official car CO2 emissions figures.
According to TMC managing director Paul Hollick, removing the surcharge would not only meet the government's desire for a simple way to rectify the imbalance in company car tax, but would also reflect real-world cost constraints and restore confidence in the UK new car market.
He said that stricter testing had largely solved problems connected with NOx emissions and the 'dieselgate' scandal, and therefore argued that persisting with the surcharge was unjustified.
He said: "The government is already under fire from its own business advisers for not bringing forward 2% BIK for pure electric vehicles to help the economy and the environment.
"We believe fleets can now make a very strong case that the government can at least solve its unanticipated problem with WLTP by removing the diesel BIK surcharge at the first opportunity.
"Today's new fleet diesel cars emit 55 times fewer particulates and nearly seven times less NOx than those being operated when the diesel surcharge was first brought in. The reality is that the surcharge was there to incentivise cleaner diesels and it has already gone a long way to achieving that goal."
Hollick said there was no justification for retaining the surcharge until Real Driving Emissions-certified models - which would be exempt - arrive on the market, especially when the government's own guidelines for clean air zones exempt all current Euro 6 cars from toxicity charges.
He added: "It seems quite clear that the government didn't appreciate how much of an additional burden WLTP and correlated NEDC would impose on company car taxpayers.
"Removing the surcharge at the earliest opportunity (April 2020) would rectify that mistake as well as meeting the Treasury's desire for a simple adjustment to the BIK scales."
TMC's submission to the government's consultation will include data that it says shows how unrealistic it is to expect fleets to simply drop diesel.
It says analysis carried out in December on a sample of nearly 20,000 cars out of over 120,000 live vehicles on TMC's fuel and mileage capture database, shows that 97% are diesels.
In addition, while average real-world fuel economy for diesel and petrol cars has improved slightly over the last few years - by 6% for diesels and 2% for petrols - the latter still cost fleets 10% to 20% more in fuel, depending on the price differential at the pump, and also typically imposes higher tax on drivers and employers because they emit more CO2.