INCREASINGLY optimised manufacturer car economy figures are gifting company car drivers company car tax breaks through lower benefit-in-kind (BIK) rates.
That’s because the relationship between better fuel economy and lower CO2 emissions is closely linked. And CO2 emissions (along with price) are the basis HMRC uses for calculating company car tax BIK.
So the better the car fuel economy figures, the lower the CO2 emissions and therefore the exposure to benefit in kind company car tax is reduced.
In terms of company car tax it’s a difference of up to three company car tax bands – say, 13% rather than 16%
The average difference between the official car fuel economy ratings for new cars in Europe and their actual efficiency soared to 31% last year from 8% in 2001. T&E claims it’s even more for company car drivers – 44%.The increasing discrepancy between actual and stated fuel economy has been unearthed in this year’s Mind the Gap report by the campaigning group for greener travel, Transport & Environment (T&E) in Brussels.
The advocacy group says the gap could grow to more than 50% by 2020 unless regulatory agencies adopt a new standard. T&E backs the Worldwide Harmonized Light Vehicles Test Procedure, which the EC has recommended be phased in three years from now.
What Transport & Environment says
- The distorted test results cheat EU regulations, which are designed to reduce CO2 emissions
In terms of CO2 emissions, the report claims that official figures show a gap of 17 g/km of CO₂ between claimed and real world emissions. In terms of company car tax that’s a difference of up to three company car tax bands – say, 13% rather than 16%.
The criticism of car makers’ claims comes a week after South Korean manufacturer Hyundai-Kia was hit by a $100M (£62.9M) fine by the US Environmental Protection Agency under the Clean Air Act because of its exaggerated fuel economy claims.
