WLTP regime will increase fleet demand for plug-in cars, says Puddy Vehicle Solutions

Demand for plug-in cars from fleet customers will increase with the arrival of the WLTP testing regime, says Puddy Vehicle Solutions (PVS).

The company, which has published a white paper 'Real World Driving Emissions' which provides insight into how WLTP and the releated RDE test procedure will impact on company car benefit-in-kind tax, Vehicle Excise Duty and capital allowances, says these models are likely to be the least affected by potential increases in motoring taxes.

Marcus Puddy, founder of PVS, says many fleet managers and drivers remain in the dark about the potential impact of WLTP and RDE on vehicle choice lists.

As a result, making the ‘wrong’ car choice could land employers and employees with tax bills significantly higher than currently.

Industry experts have suggested that CO2 emissions on a car-for-car basis could be as much as 20% higher under WLTP testing than the outdated New European Driving Cycle (NEDC) regime, which it is replacing.

While fuel economy figures are also anticipated to be lower by around 20% or more, the new test is expected to deliver fuel economy information closer to real world performance and thus fuel bills are unlikely to increase.

Puddy said: “Company car drivers are unaware of the implications of WLTP on their benefit-in-kind tax bills because, in many cases, fleet decision-makers have not told them about the impact of the new testing regime.

"Fleet chiefs must get to grips with WLTP and disseminate that information to drivers, otherwise they could be in for a major shock when they change their company car.

"Employees that are choosing new company cars now and over the coming two years will almost inevitably see their benefit-in-kind tax burden rise. However, by making careful choices they can minimise any increase.”

WLTP is the new laboratory-based emissions and fuel economy testing procedure replacing the NEDC regime. It is being introduced in two phases for cars - new models from September 2017 and all cars from September 2018.

It is being accompanied by introduction of the RDE test procedure, which is undertaken on open roads and focuses on the reduction of emission levels of nitrogen oxides (NOx) and particle numbers (PN) and so combined with WLTP data is claimed to result in more accurate real-world emissions as well as MPG figures.

RDE is also being phased in with RDE2 applicable from January 2020 for all new car models and by January 2021 for all new cars being the critical dates from a tax perspective.

That’s because this month (April) the current company car benefit-in-kind tax diesel supplement has increased from 3% to 4% on vehicles that are not RDE2 qualified - and there are none on sale.

Simultaneously, a new Vehicle Excise Duty supplement applies to all new diesel cars first registered from April 1. It means that the First Year Rate of Vehicle Excise Duty is calculated as if cars were in the band above unless they are RDE2 certified.

The Government has confirmed that from April 2020 it will use WLTP-derived CO2 figures for tax purposes.

However, until then a two-year transitional period sees WLTP-derived figures converted back to a so-called ‘NEDC correlated’ figure using a European Commission-developed mathematical tool.