The tax regime can prove to be a powerful way of incentivising businesses and individuals to choose low emission vehicles. However, a CO₂ based approach must be applied fairly to ensure it steers behaviour, rather than unduly punishing businesses. The transition to NEDC correlated and WLTP testing has produced higher vehicle CO₂ emissions. In light of these changes to emission levels recorded, the Government must ensure that it applies tax neutrality to all CO₂ based taxes.
Lease Rental Restriction
To achieve tax neutrality for NEDC correlated tested vehicles, the BVRLA is calling for the 15% disallowed threshold for lease rental restriction to be increased from 110g/km to 120g/km for cars registered on or after 1 July 2018. In addition, the lease rental restriction should be reviewed to reflect the use of WLTP CO₂ values to ensure tax neutrality.
Capital Allowance
The BVRLA asks that the main pool threshold for cars registered on or after 1 July 2018 be increased from 110g/km to 120g/km to account for NEDC correlated values. Furthermore, the main pool threshold should be reviewed to reflect the use of WLTP CO₂ values to ensure tax neutrality.
First Year Allowance
The BVRLA is calling for firms renting or leasing ULEVs registered in the UK to be allowed to claim the 100% First Year Allowance (FYA).
The vehicle rental and leasing industry is a key route to market and could significantly stimulate the electric vehicle market. We believe it is a missed opportunity that the restriction remains in place. If the current restriction were removed, leasing firms would be able to pass on the savings to customers, incentivising them to use an electric vehicle. Furthermore, if vehicle lessors were able to claim FYA, this would narrow the gap between the cost of leasing and the outright purchase and hence a fairer market would evolve, where businesses would be more likely to lease rather than purchase outright.
We believe that allowing vehicle lessors to claim FYA would create a significant increase in demand for greener vehicles – this, in turn, would support the business case for green technology and lead to greater investment. The result could be more effective and efficient vehicles but also provide potential additional by-products relevant to other industries. Ultimately, this would support the UK’s mission to become a centre for and leader of green technology.
Vehicle Excise Duty (VED)
Cars
The BVRLA is calling for the CO₂ values for the VED First Year Rate to be adjusted to reflect the unintended tax rise in 2019 caused by NEDC correlated and WLTP values.
Vans
The BVRLA welcomes a reduced VED rate for ultra-low emissions vans but also calls on the Government to delay the introduction of CO₂ based VED system for vans until greener products are available across all vehicle weights. Currently, the full weight range of commercial vehicles does not exist in the market. And where these vehicles are available, they are significantly more expensive than their internal combustion engine alternatives, difficult to order in large volumes, as well as to operate efficiently.
Larger vans – which will be needed for some jobs because of operational efficiency and to prevent multiple journeys and overloading – aren’t currently available in the market. Where available, such as the LDV ev80, it costs three times as much as its internal combustion engine equivalent with list prices in the range of £16-£21K. Whilst the current plug-in van grant is a helpful incentive, it doesn’t go far enough to address the cost parity issue. Therefore, the association is calling for more incentives for those buying greener vans.
The BVRLA would also strongly urge the Government to focus on stimulating manufacturers to scale up the volume of supply of zero and ultra-low emission vans before it reforms the VED system for vans.
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