For those who double up their vans as the company motor in order to save on a bit of tax based on the emission threshold, the recent decision to drop the limit to below 100g/km will scupper many vehicle owners.
The rate, which has stood at 120g/km previously, was a target many manufacturers have been working towards to entice companies, especially in the field sales market, to buy their brand based on the fact that their emission levels qualified for the lower tax rate. However, from April 2012, to qualify for that same band of tax, emissions must now not exceed 99g/km.
We all recognise the need to reduce the carbon footprint, but a drop of 16.67% in one hit will have companies with large fleets, let alone car and van manufacturers, seething. Many in the industry are suggesting that this latest move is less to do with saving the planet, rather a move to get more tax out of the private sector in a manner they can do very little about.
It is unclear yet whether this will have any effect on car, fleet and van insurers who have offered discounted premiums for those who have strived to be emission-conscious, purely because higher-efficiency engines, in order to deliver that goal are just that: more efficient, leading to less likelihood of breakdown.
Lex Autosales have collated information about how the reduction, being labelled ‘The QUALEC Effect’ will impact on businesses who have ordered their fleet for this year based on the previous qualification parameters.
According to their statistics, almost half (45%) of new fleet will be in the 100-120g/km tolerance band, as well as many existing fleet vehicles residing there, too. Furthermore, only 8% of new fleet motors will fall into the new 10% Benefit In Kind bracket, which has seen reduced National Insurance and company car tax thresholds up to this point.
This move could play out two ways, as was the case when the legislations governing company cars were amended around the turn of the century.
Either employees in middle management who are not on excessive salaries but qualify for a company vehicle will react by stating that they can no longer afford to run a company car, meaning either a shrinking of the pool (reducing new automotive orders) or alternatively, companies will be forced to remunerate their staff to cover the extra tax and insurance at a time when businesses can ill afford additional costs of any nature.
The only sensible way to offset any extra outlay is to shop around for cheaper car and van insurance, which may offset any extra costs incurred by organisations who have sizeable fleets that will be impacted.
Alternatively, as Norman Tebbit once suggested, if you can’t afford to drive to work, get on your BIK.