Press Release

Government’s road tax plans set to cost car hire firms millions

Release Date: 
22/11/2016

The car rental industry could be hit with a tax rise of more than £30 million if the government goes ahead with its plans to change the Vehicle Excise Duty regime next year.

In the 2015 Summer Budget, the previous Chancellor of the Exchequer, George Osborne, announced that a new taxation system will be introduced for cars registered after 1st April 2017. The first year tax for new cars will still be linked to CO2 emissions, but in subsequent years the tax will be calculated according to the vehicle’s list price.

Rental companies have said that if they were to operate similar fleets from April 2017, these changes would see them hit with a tax rise of £31.4m. In order to mitigate against this tax rise, car rental firms have said they will operate their fleets for longer. Data supplied to the BVRLA by rental companies suggests this will result in over 29,000 fewer new car registrations by car rental firms next year.

Ahead of tomorrow’s Autumn Statement, BVRLA Chief Executive Gerry Keaney has urged new Chancellor Philip Hammond to defer or phase in the implementation of the first year VED rates. He said, “Rental companies account for a substantial proportion of new car purchases in the UK, and if these reforms go through, the Government will seriously damage its green agenda and its air quality goals. Many of these cars are ultra-low emission vehicles, and by introducing these VED reforms, the government will be adversely hampering its overall goal to drive the take-up of clean vehicles and improve road safety.”

The BVRLA believes that the VED changes will result in rental companies choosing to keep their existing fleet longer. By doing this – instead of purchasing new cars – even fewer modern, clean, safe vehicles will be purchased and put onto the UK’s roads. Furthermore, it will reduce the supply of these nearly-new vehicles into the second-hand marketplace, preventing more motorists from accessing affordable low-emission cars.

The proposals will also prevent the industry from claiming £1.67million every year in legitimate refunds. Car rental companies operate the newest fleet on UK roads, and the average rental car is just eight months old. However, from April 2017, rental companies will no longer be able to reclaim the full first year rate of tax on any vehicle they dispose of which emits more than 110 g/km CO2.

Keaney said, “We are calling for these complex refund rules to be removed so that anybody selling their car is fairly entitled to claim back the full amount of unused tax owed to them. Tomorrow’s Autumn Statement gives the new Chancellor the perfect opportunity to show leadership and signal that he clearly understands the negative impact these changes to the VED system could have on the UK automotive industry.”

-ENDS-

About the BVRLA

Established in 1967, the British Vehicle Rental and Leasing Association is the UK trade body for companies engaged in the rental and leasing of cars and commercial vehicles. Its 900+ members operate a combined fleet of around 4.5million cars, vans and trucks. BVRLA members buy nearly half of all new vehicles sold in the UK, supporting around 317,000 jobs and contributing nearly £25bn to the economy each year.

By consulting with government and maintaining industry standards, the BVRLA helps its members deliver safe, sustainable and affordable road transport to millions of consumers and businesses. For more information, visit www.bvrla.co.uk.

For more information, contact:
Toby Poston – Director of Communications & External Relations
toby@bvrla.co.uk
tel: 01494 545700
mob: 07979 756533

Jamie Fretwell - Media Relations & Communications Manager
jamie@bvrla.co.uk
tel: 01494 545710
mob: 07790 271806