How to prepare your car fleet for the new registration requirements from 1 September 2018
As of 1 September 2018, all new car registrations will need to issue CO2 emission based on WLTP (Worldwide Harmonised Light Vehicle Test Procedure) rather than the previously applied NEDCA.
A few months ago we talked about the impact WLTP will have on company car fleets, suggesting the following three challenges:
The movement of official CO2 emissions data for a car fleet will impact a company’s carefully constructed fleet CO2 emissions target.
Capital allowance claims
It will impact capital allowance claims as cars will move above the new threshold for claiming the standard rate of 18 per cent which, as of the introduction, will be 110 g/km.
In many cases, NEDC2 will effectively move the Benefit in Kind (BiK) of a car two brackets higher.
Potential ways to manage WLTP
Unless a company has very tight control on their car fleet structure and understands the impact of these changes to a granular level, it is likely that they are attempting to manage these impacts by currently observing two possible directives on company car orders:
- As only a few manufacturers have released their completed WLTP emissions figures, they could issue a restricted company car order list, covering only those that are WLTP compliant; severely limiting employee choice.
- Alternatively, they could allow older models of cars which haven’t been tested for WLTP, while anticipating the possibility of a negative impact on BiK tax and employers’ National Insurance contributions when the actual WLTP figures are released. This could result in a hike in personal taxation and/or a request to cancel the order.
Although the above two solutions allow a business to navigate the uncertainty of WLTP, they are not ideal and could cause confusion, employee resentment and cost issues.
Support to manage external factors
To be better placed to deal with the impact of WLTP many businesses employ the services of a Fleet category partner. A fleet category partner operates as client-side support, managing the supply chain and ensuring a helicopter-view of the whole fleet dynamic and the supply chain.
Having a completely transparent overview of the car fleet, with a firm grip on costs, compliance and replacement cycles, means the business can understand the sensitivities of the fleet to external factors such as WLTP, resulting in quick and informed decisions.
So rather than taking a compromised approach to managing WLTP, like the scenarios above, having a detailed understanding of the fleet means strategic decisions can be made that will result in the best possible outcome.
A number of our clients who are dealing with WLTP are using their transparent view of its impact to manage their order procedures accordingly, putting directives in place that enhance the medium and long-term benefit to the employee and the business.
Ultimately, having a fleet category partner allows a faster, better informed and more controlled policy procedure that can react accordingly to extraneous factors such as compliance, taxation and cost increases.
This article was provided by Fleetworx.
Read the next article
- Benefits Technology
- Bonus & Pay
- Business mobility
- Company Cars
- Employee Engagement
- Employee Share Plans
- Financial Wellness
- Flexible Benefits
- For SME employers
- Future Predictions
- Group Risk Insurance
- Health & Wellbeing Sponsored by Aviva
- International Benefits Sponsored by Zurich
- Responsible Reward
- Reward/benefits strategy
- Staff Motivation
- Tax Efficient Benefits
- Total Reward
- Voluntary Benefits
- Workplace Pensions
- Workforce Demographics
- Research reports
- REBA news round-up
- REBA professional members
- REBA news
- REBA training
Sign up for REBA Professional Membership and join our community
Professional Membership benefits include receiving the REBA regular email alert, gaining access to free research and free opportunities to attend specialist conferences.
Professional Membership is currently complimentary for qualifying reward and benefits practitioners.Join REBA today