New changes will impact company car fleets

(Posted on 18/09/20)

From new tax bands to green number plates, several new initiatives, which will have a direct impact on fleets, come into force over the coming year.

We look at some of the changes which will affect company car fleets and could affect purchasing decisions over the next year.  

Lease Rental Restrictions

From April 2021 the CO2 threshold for Lease Rental Restrictions will reduce. Currently fleets with vehicles of 110g/km CO2 can reclaim 100% expenses for the lease cost which is deducted against income or corporation tax.  

CO2 emissions               Allowed rentals             Disallowed rentals

110 g/km or below        100%                            0%

Above 110 g/km            85%                              15%

For contracts entered in to from April 2021, tax relief for leased cars will be limited according to new CO2 emissions.

CO2 emissions               Allowed rentals             Disallowed rentals

50 g/km or below          100%                            0%

Above 50 g/km             85%                              15%

RDE2 certified vehicles

The number of RDE2 compliant vehicles will increase as manufacturers produce more diesels with taxable benefits.

RDE2 or Real Driving Emissions Step 2 is a procedure used by vehicle manufacturers to test the emissions a car produces under real driving conditions rather than in a factory. It is measured through portable emissions-measuring equipment in a variety of real-life driving trips.

By opting for vehicles which have passed the RDE2 standard, company car drivers will benefit from tax savings as the 4% benefit-in-kind (BIK) tax diesel surcharge is removed. The 4% diesel surcharge applies to all models that do not meet the RDE2 standard.

Fleets opting for RDE2 compliant vehicles also benefit from lower Class 1A NICs and first-year VED costs in comparison with non-compliant models, the savings over a three to four year contract could run into thousands.

Benefit-In-Kind (BIK) tax

The new emissions tests have also impacted on BIK tax on company cars. This April the government changed its BIK rates to take account of the higher on-paper CO2 emissions derived from the new emissions tests.

WLTP CO2 rates are typically higher than the New European Driving Cycle (NEDC) rates for the same model of car, so the government deducted two percentage points of BIK off the rates used for older, NEDC-assessed cars this April.

This will reduce further to 1% in 2021/22 and will disappear completely the following year. So, if a vehicle was tested under WLTP and has higher on-paper CO2 emissions than an NEDC-tested car, there will be no reduction in BIK from April 2022.

The exception is fully electric vehicles which are not subject to BIK. Again, this will change next year. In 2021/22 they will be subject to a BIK rate of 1%, and in 2022/23 this increases to 2%.

Green number plates

Green number plates are set to be rolled out from this autumn under plans to drive a green economic recovery.

As part of the government’s plans to achieve net zero emissions by 2050, drivers will be encouraged to make the switch to electric vehicles through the introduction of green number plates. The plates will make it easier for cars to be identified as zero emission vehicles, helping local authorities design and introduce new policies to incentivise people to own and drive them.

For example, drivers could benefit from local initiatives such as cheaper parking and cost-free entry into zero-emission zones where those with a green number plate will be recognised as eligible.

The plates will be identifiable by a green flash on the left-hand side and will be available for zero emission vehicles only.

New models

Popularity has surged in electric vehicles and SUVs this year. The trend is expected to continue into next year too. Here are some of the models due to launch in the coming year:

Alfa Romeo Tonale – early 2021

Ford Puma ST – December 2020

Hyundai Tucson – October 2020

Mini Countryman – October 2020

Nissan Qashqai – Early 2021

Seat Ateca – this autumn

Toyota Yaris Cross – Early 2021

Vauxhall Mokka – Early 2021

Citroen C4 – January 2021

BMW X8 – 2021

Ford Fusion – Early 2021

Jaguar Fpace – this autumn

Mercedes SL – December 2020

Volkswagen Golf GTI

Audi Q4 E-tron – late 2020

BMW i4 – 2021

Hyundai Ioniq 5 – 2021

Jaguar XJ – late 2021

Tesla Model Y – late 2021

Mercedes C-Class – 2021

Mercedes S-Class – November 2020

For more information on any of the issues covered in this blog contact Fleetsauce:

Call: 08000 321 433

Email: info@fleetsauce.co.uk

Visit: www.fleetsauce.co.uk

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